LOAN AGREEMENT DATED AS OF FEBRUARY 17, 2005 BETWEEN INDEPENDENCE AIR, INC., AS BORROWER AND GENERAL ELECTRIC CAPITAL CORPORATION, AS ADMINISTRATIVE AGENT AND AS LENDER AND THE LENDERS FROM TIME TO TIME PARTY HERETO
Exhibit 10.54
Pursuant to 17 CFR 240.24b-2, confidential information (indicated by [***]) has been omitted and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.
Execution Version
DATED AS OF FEBRUARY 17, 2005
BETWEEN
INDEPENDENCE AIR, INC.,
AS BORROWER
AND
GENERAL ELECTRIC CAPITAL CORPORATION,
AS ADMINISTRATIVE AGENT AND AS LENDER
AND
THE LENDERS
FROM TIME TO TIME PARTY HERETO
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Section 9.8. Successors and Assigns; Participations; Assignments |
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Section 9.11. Governing Law; Submission to Jurisdiction; Venue |
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THIS LOAN AGREEMENT, dated as of February 17, 2005 (this “Agreement”), is among INDEPENDENCE AIR, INC., a California corporation (the “Borrower”), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as the Administrative Agent for the Lenders (the “Administrative Agent”), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as lender and such other lenders as may from time to time be party hereto (together with the initial lender named herein, the “Lenders”). Certain capitalized terms used herein are defined, and certain rules of construction are specified, in Schedule 1.
BACKGROUND
1. The Lenders have agreed to make loans to the Borrower to be secured by a Lien on certain aircraft engines and spare parts owned by the Borrower and to be guaranteed by the Guarantor.
2. In connection with the foregoing, the parties hereto wish to enter into certain related understandings, as set forth herein.
The parties hereto agree as follows:
THE LOANS
Section 1.1. The Loans.
(a) Commitments. Subject to the terms and conditions of this Agreement, on the Funding Date, the Lenders shall make a loan to the Borrower in the principal amount equal to the Aggregate Series A Commitment (the “Series A Loan”), and a loan to the Borrower in the principal amount equal to the Aggregate Series B Commitment (the “Series B Loan”, and together with the Series A Loan, the “Loans”). As evidence of the funds advanced by each Lender on the Funding Date pursuant to its Series A Commitment, the Borrower shall issue and deliver to such Lender, as provided hereunder, a Series A Note payable to such Lender in an original principal amount equal to the amount of its Series A Commitment. As evidence of the funds advanced by each Lender on the Funding Date pursuant to its Series B Commitment, the Borrower shall issue and deliver to such Lender, as provided hereunder, a Series B Note payable to such Lender in an original principal amount equal to the amount of its Series B Commitment. The Series A Notes and the Series B Notes shall each be substantially in the form set forth in Exhibit D.
(b) Amortization. The principal of each Loan, and the Notes evidencing such Loan, shall be due and payable in sixty (60) consecutive monthly installments on each Payment Date, commencing with the Payment Date occurring in the month immediately following the month in which the Funding Date occurs and ending on the Maturity Date. Each such installment shall be in an amount computed by multiplying the original
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principal amount of the applicable Loan or Note, as the case may be, by the percentage set forth in Schedule 4 (it being expressly understood that the information set forth on such schedule shall be expressly set forth in Annex A of each Note) opposite the Payment Date on which such installment is due; provided, however, in the event that any Loan shall have been prepaid in part pursuant to this Agreement, then from and after the date on which any such partial prepayment is made, the amount of the remaining scheduled monthly installments with respect to such Loan shall be reduced, in inverse order of maturity, by the amount of such partial prepayment.
(c) Optional Prepayment. The Borrower may not, except as otherwise expressly provided in this Agreement, prepay any Loan, in whole or in part, prior to the Designated Date. On or after the Designated Date, the Borrower may prepay all Loans in whole on any Business Day provided that (x) the Borrower provides not less than three Business Days’ prior irrevocable written notice to the Administrative Agent of the proposed prepayment date, and (y) the Borrower shall, concurrently with such prepayment, enter into such security arrangements as the Collateral Agent, in its reasonable discretion, deems acceptable to provide Acceptable Collateral in an amount equal to the Maximum Deferral Amount determined as of the date of such prepayment, and providing for periodic adjustment to reflect the Maximum Deferral Amount in effect from time to time, as security for the payment and performance by the Borrower of the GE Deferral Lease Obligations, which arrangements shall provide that such Acceptable Collateral shall remain in place for so long as the Subordinated Mortgages would have remained in place pursuant to the terms thereof in the absence of any prepayment of the Loans hereunder. If the Borrower elects to make a prepayment pursuant to this Section 1.1(c), the Borrower shall pay to the Administrative Agent, on the prepayment date specified in the Borrower’s notice delivered hereunder, the outstanding principal amount of all Loans hereunder with all accrued and unpaid interest thereon, any LIBOR Breakage Costs, and all other amounts then due and payable under the Transaction Documents. For the avoidance of doubt, the Borrower and the Lenders mutually acknowledge and agree that no partial prepayments of any Loan, or of one Loan but not the other, shall be permitted at any time, except to the extent, if any, permitted or required by Section 1.1(d) below.
(d) Mandatory Prepayment.
(i) Engine Event of Loss. If an Event of Loss occurs with respect to any Engine and the Borrower elects not to substitute another engine for such Engine in accordance with the Engine Mortgage (or if the Borrower so elects, but does not substitute another engine for such Engine in accordance with the Engine Mortgage) or if a Permitted Disposition occurs with respect to any Engine, the Borrower shall, on the date specified for payment with respect to such Event of Loss in Section 3.04(a)(i) of the Engine Mortgage or such Permitted Disposition in Section 3.04(h) of the Engine Mortgage, by payment to the Administrative Agent, prepay the Series A Loan in a principal amount equal to the amount determined pursuant to the immediately following sentence, together with accrued interest thereon to the date of such prepayment plus any LIBOR Breakage Costs, and the amount of principal so paid by the Borrower shall be applied as specified in Section 1.1(b). The amount of principal to be prepaid pursuant to
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this Section 1.1(d)(i) with respect to any Engine will be equal to the amount set forth opposite such Engine (or the Engine which such Engine has replaced) on Schedule 2. For the avoidance of doubt, any prepayment pursuant to this Section 1.1(d)(i) may be made at any time, whether before or after the Designated Date, and may be a prepayment in part only, and not a prepayment in full, of the Series A Loan.
(ii) Spare Parts Ratios. In the event that, in accordance with Section 3.03 of the Spare Parts Mortgage, the Borrower is entitled to make, and elects to make, a prepayment of the Series B Loan, then the amount of such prepayment, together with accrued interest thereon to the date of such prepayment and any LIBOR Breakage Costs, shall be paid to the Administrative Agent before the expiration of the period specified in Section 3.03(a) or (b), as the case may be, of the Spare Parts Mortgage, and the amount of principal so paid by the Borrower shall be applied as provided in Section 1.1(b). For the avoidance of doubt, any prepayment pursuant to this Section 1.1(d)(ii) may be made at any time, whether before or after the Designated Date, and may be a prepayment in part only, and not a prepayment in full, of the Series B Loan.
(iii) LDTV Ratio. If pursuant to Section 4.1(f) of this Agreement, the Borrower is entitled to make, and elects to make, a prepayment of the Loans, then the amount of such prepayment, together with accrued interest thereon to the date of such prepayment and any LIBOR Breakage Costs, shall be paid to the Administrative Agent before the expiration of the period specified in Section 4.1(f) of this Agreement, and the amount of principal so paid by the Borrower shall be applied as provided in Section 1.1(b). Subject only to Section 1.1(d)(iv) below, and notwithstanding anything to the contrary set forth elsewhere in this Agreement or in any of the other Transaction Documents, any prepayment made by the Borrower pursuant to this Section 1.1(d)(iii) shall be applied to the Loans in such proportion as the Administrative Agent may specify pursuant to instructions from the Required Lenders; it being expressly acknowledged and agreed that the Administrative Agent may elect to apply the entire amount of such prepayment to either of the Loans with the other Loan remaining unaffected or to apply such prepayment to each of the Loans in such proportion as the Administrative Agent may specify pursuant to instructions from the Required Lenders. For the avoidance of doubt, any prepayment pursuant to this Section 1.1(d)(iii) may be made at any time, whether before or after to the Designated Date, and may be a prepayment in part only, and not a prepayment in full, of the Loans or either of them.
(iv) Relationship Between Subclauses (ii) and (iii). For the avoidance of doubt, the Administrative Agent hereby expressly acknowledges and agrees on behalf of the Lenders that, if at any time the Borrower is required to make payments under both Section 3.03 of the Spare Parts Mortgage and Section 4.1(f) of this Agreement, any payment made by the Borrower shall be deemed to be made pursuant to, and shall be applied in accordance with, Section 1.1(d)(ii) above to the extent required in order for the Borrower to comply with its obligations under Section 3.03 of the Spare Parts Mortgage first, and any excess shall be deemed to be made pursuant to, and shall be applied in accordance with, Section 1.1(d)(iii) above.
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Section 1.2 Making the Loans.
(a) The Loans shall be requested by the delivery of a Notice of Borrowing by the Borrower to the Administrative Agent not later than 11:00 A.M. (New York City time) one Business Day prior to the Funding Date specified in such notice. The Administrative Agent shall give to each Lender prompt notice thereof. The Notice of Borrowing shall be irrevocable and binding on the Borrower. The Notice of Borrowing shall be in writing and shall specify therein (i) the aggregate amount of the Loans to be funded, (ii) the proposed Funding Date, and (iii) the Borrower’s account to which the Loan proceeds are to be funded. Each Lender shall, before 10:00 a.m. (New York City time) on the scheduled Funding Date, make available for the account of its Lending Office to the Administrative Agent’s Account, in immediately available funds, its Series A Commitment and its Series B Commitment. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article VI as confirmed during a closing conference call pursuant to which the Administrative Agent or its counsel shall indicate such fulfillment, the Administrative Agent shall transfer such funds to the Borrower at its account at Wachovia Bank, Richmond, Virginia, ABA # 000000000, Credit: Independence Air, Inc. Account # 207 901 911 7146. For the avoidance of doubt, the Borrower and the Lenders expressly acknowledge and agree that the Borrower shall not be entitled to draw down one or the other of the Loans without drawing down on both of them, and in no event will any Lender fund one Loan (or such Lender’s Percentage Share of such Loan) without funding the other Loan (or such Lender’s Percentage Share of such other Loan).
(b) If for any reason the Closing is not consummated on the Funding Date set forth in the Notice of Borrowing, the Borrower may, by written notice to the Administrative Agent given by 5:00 p.m., New York City time on the scheduled Funding Date, designate a delayed Funding Date for such Closing, in which case the Administrative Agent shall hold the funds provided by the Lenders until such delayed Funding Date and use reasonable efforts to invest such funds in Permitted Investments, as directed by the Borrower, provided, that if such Closing does not occur by the third Business Day after such initial scheduled Funding Date, such funds shall be returned to the Lenders, and the Loans shall be deemed not to have been made pursuant to this Section 1.2. The Administrative Agent shall pay to the Borrower upon its request any earnings from such investments, and the Borrower shall pay to the Administrative Agent upon its request any losses from such investments. If the Closing fails to occur on a scheduled or delayed Funding Date and the Borrower does not give notice of a delayed Funding Date pursuant to this Section, the Administrative Agent shall promptly return to the Lenders the amounts funded by them, the Loans shall be deemed not to have been made pursuant to this Section 1.2, and the Borrower shall pay to the Lenders upon demand LIBOR Breakage Costs with respect to amounts funded plus, in the case of failure to close on a delayed Funding Date, interest from and including the initial scheduled Funding Date to but excluding the date on which such funds are returned by 1:00 p.m. (New York City time) (or, if returned after
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such time on such date, to but excluding the next Business Day), at a rate per annum equal to the relevant LIBOR Rate plus the Applicable Margin that would have been applicable thereto had the Closing occurred on the initial scheduled Funding Date. If the Borrower has designated a delayed Funding Date pursuant to this Section and the Closing occurs on such delayed Funding Date, each Loan shall begin to accrue interest at the relevant LIBOR Rate plus the Applicable Margin on the date that funds were originally provided by the Lenders to the Administrative Agent to make such Loan (which shall be deemed to be the commencement date of the initial Interest Period for such Loan); provided, however, if all conditions precedent specified in Article VI are satisfied in full on or before the initial scheduled Funding Date and the Closing does not occur on the initial scheduled Funding Date solely due to the failure of the Lenders to fund the Loan pursuant to their respective Commitments hereunder (but the Closing does occur later pursuant to this Section 1.2(b)), then each Loan shall begin to accrue interest only on the date that the Closing actually occurs (rather than from the initial scheduled Funding Date).
Section 1.3. Fees. The Borrower shall pay to the Administrative Agent for the account of the Lenders on the Funding Date an upfront arrangement fee in the amount of one percent (1%) of the aggregate principal amount of the Loans funded on the Funding Date.
Section 1.4. Commitment Termination. The Aggregate Commitment and the Commitment of each Lender shall terminate on the earlier of (i) the making of the Loans pursuant to Section 1.2 above, or (ii) at 5:00 pm (New York time) on the Commitment Termination Date.
Section 1.5. Use of Proceeds. The Borrower may use the proceeds of the Loans for any general corporate purpose of the Borrower.
Section 1.6. Payments and Computations .
(a) The Borrower shall make each payment hereunder and under the Notes not later than 12:30 p.m. (New York City time) on the day when due in Dollars to the Administrative Agent’s Account in immediately available funds, without set-off or counterclaim (except for any required withholding taxes not subject to indemnification hereunder). Any amounts received after such time may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for the purpose of calculating interest thereon.
(b) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or other amounts as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of a Loan to be made in the next following calendar month, such payment shall be made on
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the next preceding Business Day, and such reduction of time shall be given effect in the computation of the payment of interest hereunder.
Section 1.7. Allocation of Payments. So long as no Event of Default has occurred and is continuing, (i) payments matching specific scheduled payments then due shall be applied to those scheduled payments; (ii) voluntary prepayments shall be applied in accordance with the provisions of Section 1.1(c); and (iii) mandatory prepayments shall be applied as set forth in Section 1.1(d). All payments and prepayments applied to a particular Loan shall be applied ratably to the portion thereof held by each Lender as determined by its Ratable Share of such Loan. As to any other payment and as to all payments made when an Event of Default has occurred and is continuing, the Borrower hereby irrevocably waives the right to direct the application of any and all payments received from or on behalf of the Borrower.
Section 1.8. Special Provision Regarding Loans. To induce the Lenders to provide the Loans on the terms and conditions set forth herein, if (i) any Loan is repaid in whole or in part prior to the last day of any applicable Interest Period (whether that repayment is made pursuant to any provision of this Agreement or any other Transaction Document or occurs as a result of acceleration, by operation of law or otherwise); (ii) the Borrower shall default in payment when due of the principal amount of or interest on any Loan; (iii) the Borrower shall refuse to accept any borrowing of, or shall request a termination of any borrowing, of any Loan after the Borrower has given a notice thereof in accordance with this Agreement, then the Borrower shall indemnify and hold harmless each Lender from and against any loss or expense arising from the reemployment of funds obtained by it or from fees payable to terminate deposits from which such funds were obtained. For the purposes of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually funded its Percentage Share of the applicable Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to its Percentage Share of the applicable Loan and having a maturity comparable to the relevant Interest Period; provided, that each Lender may fund its Percentage Share of each applicable Loan in any manner it sees fit, and the foregoing assumption shall only be used for the calculation of amounts payable under this subsection. This covenant of the Borrower shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. As promptly as practicable under the circumstances, each Lender shall provide the Borrower with its written calculation of all amounts payable pursuant to this Section 1.8, and such calculation shall be binding on the parties hereto absent manifest error. The amounts calculated pursuant to this Section 1.8, and payable by the Borrower pursuant to this subsection as well as other provisions of this Agreement, are sometimes referred to as “LIBOR Breakage Costs”).
INTEREST
Section 2.1. Rate of Interest. Each Note shall bear interest on the unpaid principal amount thereof for each Interest Period from the date made through maturity (whether by acceleration or otherwise) at a rate equal to the sum of the LIBOR
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Rate for such Interest Period plus the Applicable Margin. The applicable Interest Period for determining the rate of interest with respect to each Note or portion thereof shall be established in accordance with Section 2.2.
Section 2.2. Interest Periods.
(a) Interest Periods. The first Interest Period for the Notes evidencing each Loan shall be the period commencing on the Funding Date (provided, that in the case of a delayed Funding Date, the date funds for such Loan are made available to the Administrative Agent shall be the commencement date of such Interest Period pursuant to Section 1.2(b)) and shall end on, but shall exclude, the third subsequent Interest Payment Date for such Notes, and thereafter each successive Interest Period shall commence on (and shall include) the last day of the next preceding Interest Period and shall end on (but shall exclude) the third subsequent succeeding Interest Payment Date, provided however that notwithstanding anything in this Agreement to the contrary, the final Interest Period for the Notes shall end on the Maturity Date.
(b) Expiration of Interest Periods. If an Interest Period for any Note would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period for any Note would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day.
Section 2.3. Interest Payments. Accrued interest on each Note shall be payable in arrears on each Interest Payment Date for such Note; provided, that (i) interest accrued pursuant to Section 2.4 shall be payable on demand and (ii) in the event of any repayment or prepayment of any Note (or any portion thereof), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment.
Section 2.4. Default Rate. Notwithstanding Section 2.1, the Borrower shall pay the Administrative Agent for the account of the Lenders and itself (as applicable) on demand interest on any principal, interest, fee or other amount not paid hereunder, under any Note or under any other Transaction Document when due at a rate per annum that is [***]% per annum in excess of the LIBOR Rate for the relevant Interest Period plus the Applicable Margin (the “Default Rate”).
Section 2.5. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day year for the actual number of days elapsed in the period during which such amount accrues. In computing such amounts, the first day of the applicable period shall be included, and the last day of the applicable period shall be excluded; provided that if a Note (or any portion thereof) is repaid on the same day on which it is made, one day’s interest shall be paid on that Note or the relevant portion thereof.
Section 2.6. Maximum Rate. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Note, together with all fees,
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charges and other amounts which are treated as interest on such Note under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Note in accordance with applicable law, the rate of interest payable in respect of such Note or the relevant portion thereof hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Note or the relevant portion thereof but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the LIBOR Rate to the date of repayment, shall have been received by such Lender.
REPRESENTATIONS AND WARRANTIES
Section 3.1. General Representations and Warranties. The Borrower represents and warrants to the Administrative Agent and each Lender as of the date of this Agreement that:
(a) Organization; Powers. Each of the Borrower and the Guarantor (i) is duly incorporated, validly existing and in good standing under the laws of its state of incorporation, (ii) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure to be so qualified would not result in losses or liabilities which could reasonably be expected to have a Material Adverse Effect, (iii) has all requisite corporate power and authority to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease and to carry on its business as now conducted or proposed to be conducted. With respect to each of the Borrower and the Guarantor, its name as it appears in its Articles or Certificate of Incorporation, as the case may be, its jurisdiction of incorporation, its organizational identification number in its jurisdiction of incorporation, and its federal employer identification number are as follows:
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Name |
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Jurisdiction of |
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Organizational |
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F.E.I.N. |
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Borrower: |
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Independence Air, Inc. |
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California |
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C1654054 |
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00-0000000 |
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Guarantor: |
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FLYi, Inc. |
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Delaware |
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2265793 |
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00-0000000 |
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(b) Authorization; Enforceability. The execution and delivery by each of the Borrower and the Guarantor of the Transaction Documents and the Subordinated Documents to which it is a party and the performance by the Borrower and the Guarantor of its obligations thereunder are within the respective corporate powers of the Borrower
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and the Guarantor, have been duly authorized by all necessary corporate action of Borrower and the Guarantor, do not require any stockholder approval, or approval or consent of any trustee or holder of indebtedness or obligations of the Borrower or the Guarantor except such as have been duly obtained. This Agreement and the Guaranty have been duly executed and delivered by the Borrower and the Guarantor, respectively, and the other Transaction Documents and the Subordinated Documents to which the Borrower and/or the Guarantor is a party will be duly executed and delivered by the Borrower when required by this Agreement. This Agreement and the Guaranty constitute, and each of the other Transaction Documents and Subordinated Documents to which the Borrower and/or the Guarantor is a party when executed and delivered by the Borrower or the Guarantor, as the case may be, will constitute, a legal, valid and binding obligation of the Borrower or the Guarantor, as the case may be, enforceable against the Borrower or the Guarantor, as the case may be, in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(c) No Violation. The execution and delivery by the Borrower and the Guarantor of the Transaction Documents and the Subordinated Documents to which it is a party and the performance by the Borrower and the Guarantor of its obligations thereunder do not and will not (a) violate any provision of the Articles or Certificate of Incorporation or By-Laws of the Borrower or the Guarantor, respectively, (b) violate any law applicable to or binding on the Borrower or the Guarantor, as the case may be, or (c) violate or constitute any default under, or result in the creation of any Lien (other than as permitted under the applicable Mortgages) upon any Collateral under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, lease, loan or other material agreement, instrument or document to which the Borrower or the Guarantor is party or by which either the Borrower or the Guarantor or any of their respective properties is bound.
(d) Governmental Approvals. The execution and delivery by the Borrower and the Guarantor of the Transaction Documents and Subordinated Documents to which it is a party and the performance by the Borrower and the Guarantor of its obligations thereunder do not and will not require the consent or approval of, or the giving of notice to, or the registration with, or the recording or filing of any documents with, or the taking of any other action in respect of, any Governmental Authority, other than the filings described in Section 3.2(b).
(e) Litigation. Except as set forth in the Guarantor’s Annual Report on Form 10-K for 2003 (as amended through the Funding Date), or in any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by the Guarantor with the SEC subsequent to such Form 10-K (in each case as amended through the Funding Date) (a list of which filings has been provided by Borrower to the Administrative Agent on the Funding Date), no action, claim or proceeding is now pending or, to the Actual Knowledge of the Borrower or the Guarantor, threatened against the Borrower or the Guarantor before any court, governmental body, arbitration board, tribunal or administrative agency, which is reasonably likely to be determined adversely to the
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Borrower or the Guarantor and if determined adversely to the Borrower or the Guarantor, as the case may be, would result in a Material Adverse Effect , except as disclosed in Schedule 3.1(e) hereto.
(f) Financial Condition. The audited consolidated balance sheet of the Guarantor and its consolidated subsidiaries with respect to its most recent fiscal year included in its Annual Report on Form 10-K for 2003 (as amended through the Funding Date) filed by the Guarantor with the SEC, and the related consolidated statements of operations and cash flows for the year then ended have been prepared in accordance with GAAP and fairly present in all material respects the financial condition of the Borrower and its consolidated subsidiaries as of such date and the results of its operations and cash flows for such period. The consolidated balance sheet of the Guarantor as of September 30, 2004 included in its Quarterly Report on Form 10-Q for the period ended September 30, 2004, and the related consolidated statement of operations and cash flows for the three months then ended have been prepared in accordance with GAAP (subject to normal year-end adjustments and the absence of footnotes) and fairly present in all material respects (subject to such adjustments and the absence of footnotes) the financial condition of the Guarantor and its consolidated subsidiaries as of such date and the results of its operations and cash flows for such period. Since the date of the Guarantor’s Quarterly Report on Form 10-Q for the period ended September 30, 2004, no event has occurred that, alone or with other events, could reasonably be expected to have a Material Adverse Effect, except for (i) the matters addressed and resolved or waived upon consummation of the Restructuring Transactions, and (ii) the matters disclosed in Schedule 3.1(e) hereto.
(g) No Default. No Event of Default or Potential Default has occurred and is continuing.
(h) Investment and Holding Company Status. Neither the Borrower nor the Guarantor is (i) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (ii) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.
(i) Use of Proceeds. No part of the proceeds of the Loans will be used, whether directly or indirectly, for any purpose that entails a violation of Regulations U or X of the Board of Governors of the Federal Reserve System.
(j) Licenses, Permits, etc. The Borrower is a Certificated Air Carrier and holds all licenses, permits and franchises from the appropriate Governmental Authorities necessary to authorize the Borrower to lawfully engage in air transportation and to carry on scheduled commercial passenger service as currently conducted, except where the failure to so hold any such license, permit or franchise would not have a Material Adverse Effect.
(k) Compliance with Laws. Each of the Guarantor and its Subsidiaries (including Borrower) is in compliance with all laws, regulations and orders of any governmental or regulatory authority or agency applicable to it or its property, except
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where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
(l) Tax Returns. The Guarantor and its Subsidiaries (including Borrower) have timely filed all Federal income tax returns and all other material tax returns that are required to be filed by them and have paid all Taxes that are material in amount shown to be due pursuant to such returns or pursuant to any assessment received by the Guarantor or any of its Subsidiaries, other than any Taxes that are not yet delinquent and any such assessment that is being contested in good faith through appropriate proceedings and against which adequate reserves are being maintained and the nonpayment of which (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Guarantor and its Subsidiaries (including Borrower) in respect of taxes and other governmental charges are, in the opinion of the Borrower, adequate.
(m) Information. The Guarantor’s Annual Report on Form 10-K for 2003 filed with the SEC and each of the Guarantor’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K subsequently filed by the Guarantor with the SEC, as of the date it was filed with the SEC (or, if such report has been amended, in each case as amended through the Funding Date) did not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(n) ERISA. The Guarantor and each of its Subsidiaries (including Borrower) have met their minimum funding requirements under ERISA with respect to all of their employee benefit plans covered by the minimum funding requirements of ERISA, and have not incurred any material liability to the Pension Benefit Guaranty Corporation (or any entity succeeding to any or all of said Corporation’s functions under ERISA) under ERISA in connection with any such plan. None of the employee benefit plans maintained by the Guarantor or any of its Subsidiaries (including Borrower) is subject to Title IV of ERISA.
Section 3.2. Additional Representations re Collateral. The Borrower represents and warrants to the Administrative Agent and each Lender as of the date of this Agreement that:
(a) Good Title, Etc. The Borrower has good title to each Engine and to the Pledged Spare Parts, in each case, free and clear of any Lien of Record whatsoever and free and clear of any other Liens (other than any Permitted Liens). No Person holds any right or interest in any of the Pledged Spare Parts by virtue of any interest that such Person may have in the real property or improvements located at any of the Designated Locations (whether as fee owner, landlord, tenant, ground lessor, mortgagee, leasehold mortgagee, beneficiary of deed of trust, beneficiary of leasehold deed of trust or otherwise).
(b) Filings. Except for (x) the filing for recordation (and recordation) with the FAA of the FAA Filed Documents with respect to the Engines and the Pledged
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Spare Parts located at the Designated Locations, and (y) the filing of the Financing Statements (and continuation statements relating thereto at periodic intervals) with the Secretary of State of the State of California with respect to the Collateral and the “collateral” described in the Subordinated Mortgages, no further action, including any filing or recording of any document (including any financing statement in respect thereof under Article 9 of the UCC) is necessary in order to establish and perfect the Administrative Agent’s interest in the Collateral created under the Senior Mortgages and the Collateral Agent’s interest in the “collateral” described in the Subordinated Mortgages, in each case as against the Borrower and any other Person, in each case in any applicable jurisdiction in the United States.
(c) No Event of Loss. No event has occurred that constitutes, or with the giving of notice or lapse of time or both will give rise to, an Event of Loss with respect to any Engine.
(d) Section 1110. The Administrative Agent is and will be entitled, pursuant to the Senior Mortgages, in the event of a case under Chapter 11 of the Bankruptcy Code in which Borrower is a debtor, to the benefits of Section 1110 of the Bankruptcy Code with respect to the Engines, Engine Documents, Pledged Spare Parts (other than the Identified Spare Parts) and Spare Parts Documents (other than the Spare Parts Documents relating to the Identified Spare Parts).
(e) Condition. Each Engine and all Pledged Spare Parts have been maintained in accordance with Borrower’s FAA-approved maintenance program and, except for Engines and Pledged Spare Parts held for repair or overhaul in the ordinary course of business, are in the condition and state of repair required under the Borrower’s FAA-approved maintenance program relating to such Engine and to such Pledged Spare Parts, respectively. No appliances, parts, interests, appurtenances, accessories or other equipment of whatever nature which are incorporated or installed in or attached to any Engine or any Pledged Spare Parts are leased by the Borrower (other than, in respect of any Engine, an airframe on which such Engine may be installed).
(f) Location, Identification and Release of Pledged Spare Parts. All of the Pledged Spare Parts are or will (upon becoming subject to the Lien of the Spare Parts Mortgage) be maintained by or on behalf of the Borrower at a Designated Location, subject to Section 3.02 of the Spare Parts Mortgage, except for Pledged Spare Parts sent to third parties for component repair in the ordinary course of business.
(g) Software. The Borrower confirms that (i) the only Software currently used by the Borrower to track the location, use and maintenance status of its spare parts are the software programs licensed to it by MRO Software, Inc. (“MRO”) and the database programs licensed to it by Oracle Corporation (“Oracle”), (ii) each of its license agreements with MRO and with Oracle is in full force and effect, (iii) all licensing fees (including all on-going maintenance or support fees) with respect to the foregoing license agreements have been fully prepaid at least through March 31, 2006 with respect to the MRO agreement and through February 27, 2006 with respect to the Oracle agreement, and (iv) neither MRO nor Oracle has a contractual right to terminate its license agreement
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with the Borrower other than upon the occurrence of a breach by Borrower and, in the case of MRO, upon the liquidation, dissolution, or insolvency of Borrower or upon the institution by or against Borrower of any proceeding under any law relating to bankruptcy or insolvency or the reorganization or relief of debtors.
(h) Records. The Borrower maintains its records with respect to the Pledged Spare Parts at a Borrower facility at Xxxxxxxxxx-Xxxxxx International Airport, in Dulles, Virginia, or the applicable Designated Location.
(i) Spare Parts. It is the intention of the parties to this Agreement that all Pledged Spare Parts be “spare parts” as defined in Section 40102(a)(38) of Title 49 of the United States Code. The Borrower hereby represents and warrants that it maintains the Pledged Spare Parts for the purpose of installing the Pledged Spare Parts on aircraft, aircraft engines or appliances as defined in Section 40102(a)(6), (7) and (11) of Title 49 of the United States Code.
COVENANTS
Section 4.1. Covenants of the Borrower. The Borrower shall comply with the following covenants and agreements, unless the Required Lenders shall otherwise consent:
(a) Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent and each Lender:
(i) within 120 days after the end of each fiscal year of the Guarantor, a copy of the Form 10-K (excluding exhibits) filed by the Guarantor with the SEC for such fiscal year (or in lieu of such copy, an e-mail notice that such report has been filed with the SEC and providing a web site address (which may be the Borrower’s website at xxx.xxxx.xxx or another website other than the SEC’s website) at which such report may be accessed, provided that such e-mail notice will satisfy this requirement only if such report is in fact accessible at such web site address), or, if no such Form 10-K was so filed, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by the Guarantor’s independent public accountants of recognized national standing to the effect that such consolidated financial statements present fairly in all material respects the consolidated financial condition and results of operations of the Guarantor and its Subsidiaries (including the Borrower) on a consolidated basis in accordance with GAAP;
(ii) within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Guarantor, a copy of the Form 10-Q (excluding exhibits) filed by the Borrower with the SEC for such quarterly period (or in lieu of such copy, an e-mail notice that such report has been filed with the SEC and providing
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a web site address (which may be the Borrower’s website at xxx.xxxx.xxx or another website other than the SEC’s website) at which such report may be accessed, provided that such e-mail notice will satisfy this requirement only if such report is in fact accessible at such web site address), or if no such Form 10-Q was so filed, its consolidated balance sheet and related statements of operations and cash flows as of the end of and for such fiscal quarter (in the case of the statement of operations) and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, prepared in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes;
(iii) concurrently with any delivery of financial statements under clause (i) above, an Officer’s Certificate of the Borrower certifying as to whether the Borrower has Actual Knowledge that a Potential Default or an Event of Default has occurred and is continuing and, if so, specifying the details thereof and any action taken or proposed to be taken with respect thereto;
(iv) promptly following any request therefor, such other nonconfidential information regarding the Engines, the Pledged Spare Parts, the operations, business affairs and financial condition of the Borrower, the Guarantor or any Subsidiary, or compliance with the terms of the Transaction Documents, as the Administrative Agent or Lender may reasonably request; and
(v) With respect to any employee benefit plan that is maintained by the Guarantor or any of its Subsidiaries (including Borrower) and is subject to Title IV of ERISA, upon the request of the Administrative Agent or any Lender, Borrower shall provide copies of the most recent annual reports or returns (IRS Form 5500), audited or unaudited financial statements and actuarial valuations with respect to such plans.
(b) Existence; Conduct of Business. The Borrower will, and will cause each of its Subsidiaries and the Guarantor to:
(i) do or cause to be done all things necessary to preserve and maintain its legal existence; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 4.1(c);
(ii) comply with the requirements of all applicable laws, rules, regulations and orders of governmental or regulatory authorities if failure to comply with such requirements would reasonably be expected to (either individually or in the aggregate) cause a material impairment of the ability of the Borrower to perform, or the Administrative Agent or the Lenders to enforce, the obligations of the Borrower under the Transaction Documents;
(iii) pay and discharge all Taxes imposed on it or on its income or profits or on any of its property prior to the date on which penalties attach thereto, except for any such Tax the payment of which is being contested in good faith
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and by proper proceedings and against which adequate reserves are being maintained, and the nonpayment of which (either individually or in the aggregate) could not reasonably be expected to cause a material impairment of the ability of the Borrower to perform, or the Administrative Agent or the Lenders to enforce, the obligations of the Borrower under the Transaction Documents; and
(iv) permit representatives of any Lender, during normal business hours and on reasonable notice, to discuss its business and affairs with its officers, all to the extent reasonably requested by such Lender.
(c) Mergers and Consolidations. Neither the Borrower nor the Guarantor will consolidate with or merge with or into any other Person or convey, transfer or lease all or substantially all of its assets as an entirety to any Person (the Person formed by such consolidation or into which the Company or the Guarantor is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company or the Guarantor as the case may be, as an entirety, being referred to herein as the “Successor”) unless:
(i) in the case of a transaction involving the Borrower, the Successor of Borrower shall be a Certificated Air Carrier;
(ii) in the case of either the Borrower or the Guarantor, the Successor shall execute and deliver to the Administrative Agent a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Administrative Agent containing an assumption by the Successor of the due and punctual performance and observance of each covenant and condition of the Transaction Documents and the Subordinated Documents to be performed or observed by the Borrower or the Guarantor, as the case may be;
(iii) no Event of Default shall have occurred and be continuing at the time of the proposed transaction, and no Potential Default or Event of Default shall arise upon giving effect to such transaction; such transaction shall not materially impair the ability of the Successor to perform the obligations of the Borrower or the Guarantor, as the case may be, under the Transaction Documents and Subordinated Documents to which the Borrower or the Guarantor is a party
(iv) (A) in the case of the Borrower, the tangible net worth (determined in accordance with GAAP) of the Successor, after giving effect to such transaction, shall not be less than the greater of (1) the lesser of (x) the tangible net worth of the Borrower immediately prior to such transaction and (y) the tangible net worth of the Borrower as of December 31, 2001, and (2) [***]% of the tangible net worth of the Borrower immediately before completion of such transaction; provided, that if the Guarantor owns more than 50% of the capital stock of the Borrower immediately before such transaction, the net worth test contained in this Section 4.1(c)(iv)(A) shall not prevent the Borrower from completing such transaction with the Guarantor;
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(B) in the case of the Guarantor, the tangible net worth (determined in accordance with GAAP) of the Successor, after giving effect to such transaction, shall not be less than the greater of (1) the lesser of (x) the tangible net worth of the Guarantor immediately prior to such transaction and (y) the tangible net worth of the Guarantor as of December 31, 2001, and (2) [***]% of the tangible net worth of the Guarantor immediately before completion of such transaction; provided, that if the Guarantor owns more than 50% of the capital stock of the Borrower immediately before such transaction, the net worth test contained in this Section 4.1(c)(iv)(B) shall not prevent the Guarantor from completing such transaction with the Borrower;
(v) all filings shall have been made as shall be necessary to preserve (A) the Lien of the Senior Mortgages on the Collateral on a first priority and perfected basis (subject to Permitted Liens), and (B) the Lien of the Subordinated Mortgages on the collateral described therein on a second priority and perfected basis (subject to Permitted Liens); and
(vi) promptly after the consummation of such transaction, the Borrower, or if such transaction involved the Borrower, the Successor of the Borrower, shall deliver to the Administrative Agent (A) an Officer’s Certificate of the Successor, certifying as to compliance with the conditions of this Section 4.1(c) and (B) an opinion of counsel reasonably acceptable to the Administrative Agent and in form and substance reasonably acceptable to the Administrative Agent (1) stating that the agreements entered into to effect such consolidation, merger, sale, conveyance, transfer, or lease and such assumption agreements have been duly authorized, executed, and delivered by the Successor and that they (and the Transaction Documents and Subordinated Documents, as the case may be, so assumed) constitute legal, valid, and binding obligations of the Successor, enforceable in accordance with their terms (in the case of the Transaction Documents and the Subordinated Documents, to the same extent as each such Transaction Document or Subordinated Document was enforceable against the Borrower or the Guarantor, as the case may be, immediately prior to such transaction), (2) confirming compliance with Sections 4.1(c)(i), 4.1(c)(ii) and 4.1(c)(iv), as applicable, and stating that all other conditions precedent that are legal in nature provided for in this Agreement and the other Transaction Documents and Subordinated Documents and relating to such transaction have been fulfilled, and (3) addressing such other matters as the Administrative Agent may reasonably request.
Upon any consolidation or merger, or any conveyance, transfer or lease of all or substantially all of the assets of the Borrower as an entirety in accordance with this Section 4.1(c), the Successor shall succeed to, and be substituted for, and may exercise every right and power of, the Borrower under this Agreement and the other Transaction Documents and Subordinated Documents with the same effect as if the Successor had been named as the Borrower herein. No such conveyance, transfer or lease of all or substantially all of the assets of the Borrower as an entirety shall have the effect of releasing the Borrower or any Person which shall theretofore have become such in the
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manner prescribed in this Section 4.1(c) from the Borrower’s liability in respect of any Transaction Document or Subordinated Document to which it is a party.
(d) Delivery of Post-Recording FAA Opinion. Promptly upon the recording of the Senior Mortgages and the Subordinated Mortgages pursuant to the Act, the Borrower will cause FAA Counsel to deliver to the Administrative Agent, the Collateral Agent and the Borrower a favorable opinion addressed to each of them as to such recordation and the lack of filing of any intervening documents creating a Lien with respect to any of the Engines and/or Pledged Spare Parts, as the case may be.
(e) Compliance with Mortgages. The Borrower will comply with the terms and provisions of each Mortgage.
(f) LDTV Ratio. The Borrower hereby agrees that the Borrower shall not at any time directly or indirectly permit the LDTV Ratio to be greater than the Maximum LDTV Ratio. The Borrower shall deliver an LDTV Compliance Report to the Administrative Agent on the Funding Date and monthly thereafter concurrently with the delivery of its Appraisal Compliance Report (as defined in the Spare Parts Mortgage) pursuant to Section 3.10 of the Spare Parts Mortgage. If, based upon an LDTV Compliance Report, the LDTV Ratio set forth therein is greater than the Maximum LDTV Ratio, the Company shall within ten (10) Business Days:
(i) subject additional Spare Parts or Appliances that are free and clear of all Liens other than Permitted Liens (the “Additional Parts”) to the Lien of the Spare Parts Mortgage in accordance with Section 3.03(d) of the Spare Parts Mortgage, or subject additional engines that are free and clear of all Liens other than Permitted Liens (the “Additional Engines”) to the Lien of the Engine Mortgage in accordance with the provisions thereof;
(ii) provide additional cash to the Administrative Agent to be held in its capacity as “Secured Party” under and in accordance with the Spare Parts Mortgage, with any additional cash so provided to the Administrative Agent being considered part of the “Cash Collateral” (as defined in the Spare Parts Mortgage), except that (A) the amount thereof shall not be deducted from the principal balance of the Series B Loan for purposes of calculating the Maximum Collateral Ratio and/or the Maximum Rotables Ratio, and (B) when the amount thereof is to be applied to prepayment of the Loans pursuant to the Spare Parts Mortgage, such amount shall be allocated between the Series A Loan and the Series B Loan at the election of the Administrative Agent in accordance with Section 1.1(d)(iii) and (iv) hereof;
(iii) prepay some or all of the Loans pursuant to Section 1.1(d)(iii) hereof; or
(iv) any combination of the foregoing;
such that, the LDTV Ratio, as recalculated giving effect to such action taken pursuant to this Section 4.1(f) and, in the case of clause (i) of this Section 4.1(f), using the Current
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Market Value of any such Additional Parts determined pursuant to Section 3.03(d) of the Spare Parts Mortgage, or the Current Market Value of any such Additional Engines determined pursuant to Section 4.1(g)(ii) below, as the case may be, would not be greater than the Maximum LDTV Ratio.
(g) Engine Reports and Valuations.
(i) The Borrower shall, by the tenth Business Day of March, June, September and December of each year, commencing with such date in March of 2005, furnish to the Administrative Agent an Officer’s Certificate of the Borrower stating, with respect to each Engine as of the last day of the calendar month immediately preceding the date of such Officer’s Certificate (each such Officer’s Certificate being sometimes referred to herein as an “Engine Report”): (A) if such Engine is then installed on an airframe, the Borrower’s tail number of such airframe, or, if not so installed, the status (e.g., in storage, undergoing overhaul, etc.) and location of such Engine, (B) the hours and cycles of operation of such Engine since new and since its last major overhaul, and (C) the most limiting life limited part on such engine, (the “limiter”), and the cycles remaining on such limiter. In addition, concurrently with the provision of any Additional Engines pursuant to Section 4.1(1)(f)(i) above, the Borrower shall deliver to the Administrative Agent a report that sets forth the make, model and month and year of manufacture of such Additional Engine as well as all of the information required in subclauses (A) — (B) above with respect to such Additional Engine as of the date on which such Additional Engine is subjected to the Lien of the Engine Mortgage.
(ii) The Borrower expressly acknowledges that the Administrative Agent will calculate the Current Market Value of each Engine in September of each calendar year so long as any of the Obligations remain outstanding. In making its calculations under this Section 4.1(g)(ii) with respect to each Engine, the Administrative Agent will (A) obtain a report as to the then current market value of engines of like model and year in half-time maintenance status from each of three independent engine appraisers chosen by the Administrative Agent in its sole discretion, (B) compute the average of the current market values of engines of like model and year provided by the foregoing appraisers, and (C) adjust such average current market value to reflect the actual number of hours and cycles of such Engine since last overhaul as reflected in the most recent Engine Report provided by the Borrower prior to the date of determination. Following completing its calculations under this Section 4.1(g)(ii), the Administrative Agent shall send the Borrower a written notice (an “Engine Valuation Notice”) setting forth the Current Market Value of each Engine, as well as the aggregate Current Market Value of all Engines, as determined pursuant to this Section 4.1(g)(ii), and the Current Market Values set forth in such Engine Valuation Notice shall, absent manifest error, be binding for all purposes of this Agreement and the other Transaction Documents (including, but not limited to, for purposes of determining the LDTV Ratio pursuant to Section 4.1(f) above) until such time as superseded
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by a subsequent Engine Valuation Notice delivered by the Administrative Agent pursuant to this Section.
INCREASED COSTS; TAX INDEMNITY; GENERAL INDEMNITY
Section 5.1. Capital Adequacy; Increased Costs; Illegality .
(a) If any law, treaty, governmental (or quasi governmental) rule, regulation, guideline or order regarding capital adequacy, reserve requirements or similar requirements or compliance by any Lender with any request or directive regarding capital adequacy, reserve requirements or similar requirements (whether or not having the force of law), in each case, adopted after the Funding Date, from any central bank or other Governmental Authority increases or would have the effect of increasing the amount of capital, reserves or other funds required to be maintained by such Lender and thereby reducing the rate of return on such Lender’s capital as a consequence of its obligations hereunder, then the Borrower shall from time to time upon demand by such Lender (with a copy of such demand to such Administrative Agent) pay to such Administrative Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction; provided, however, in the case of any reserve requirement resulting in any payment by Borrower to any Lender pursuant to Section 5.2 below, Borrower’s obligation under this Section 5.1(a) with respect to such Lender shall be limited to as to avoid any duplicate recovery by such Lender. A certificate as to the amount of that reduction and showing the basis of the computation thereof submitted by such Lender to the Borrower and to such Administrative Agent shall be presumptive evidence of the matters set forth therein.
(b) If, due to either (i) the introduction of or any change in any law or regulation (or any change in the interpretation thereof) other than in respect of taxes (including income taxes) under Section 5.3 or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), in each case occurring after the Funding Date, there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan, then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to such Administrative Agent), pay to such Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower and to the Administrative Agent by such Lender, shall be presumptive evidence of the matters set forth therein. Each Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred to above which would result in any such increased cost, the affected Lender shall, to the extent not inconsistent with such Lender’s internal policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred by it and payable to it by the Borrower pursuant to this 5.1(b).
(c) Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law or regulation (or any change in the interpretation
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thereof) after the Funding Date shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to make or to continue to fund or maintain its Percentage Share or its Ratable Share of any Loan, then, unless that Lender is able to make or to continue to fund or to maintain its Percentage Share or its Ratable Share of such Loan at another branch or office of that Lender without, in that Lender’s reasonable opinion, materially and adversely affecting it or its Percentage Share or its Ratable Share of any Loan or the income obtained therefrom, on notice thereof and demand therefor by such Lender to the Borrower through such Administrative Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain its Percentage Share or its Ratable Share of such Loan shall terminate and (ii) the Borrower shall forthwith prepay in full all outstanding Notes with respect to such Loan owing to such Lender, together with interest accrued thereon,.
(d) Failure on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any period shall not constitute a waiver of such Lender’s right to demand compensation with respect to such period or any other period, provided, that the Borrower shall not be required to compensate a Lender pursuant to this Section 5.1 for any increased costs or reductions incurred more than 150 days prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor.
Section 5.2. Regulation D Compensation . If and so long as a reserve requirement of the type referred to in (B) below is prescribed by the Board of Governors of the Federal Reserve System (or any successor), each Lender subject to such requirement may require the Borrower to pay, contemporaneously with each payment of interest on each such Lender’s Notes, additional interest on such Notes at a rate per annum determined by such Lender up to but not exceeding the excess of (i)(A) the applicable LIBOR Rate divided by (B) a number equal to 1.0 minus the aggregate (but without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on the day that is two (2) Business Days prior to the beginning of such Interest Period (including basic, supplemental, marginal and emergency reserves under any regulations of the Federal Reserve Board or other Governmental Authority having jurisdiction with respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board) that are required to be maintained by a member bank of the Federal Reserve System over (ii) the applicable LIBOR Rate.
Section 5.3. Withholding of Taxes.
(a) Payments to Be Free and Clear. All sums payable by the Borrower under this Agreement and the other Transaction Documents to each Lender and the Administrative Agent shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax imposed, levied, collected, withheld or assessed by or within any jurisdiction or by or within any political subdivision or taxing authority thereof or therein with respect to such payments.
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(b) Grossing-up of Payments. If the Borrower or any other Person is required by law to make any deduction or withholding on account of any Tax from any sum paid or payable by the Borrower to the Administrative Agent or any Lender under any of the Transaction Documents:
(i) the Borrower shall notify the Administrative Agent in writing of such requirement;
(ii) the Borrower shall pay such Tax before the date on which any interest, addition to Tax or penalties attach thereto, such payment to be made (if the liability to pay is imposed on the Borrower) for its own account or (if that liability is imposed on the Administrative Agent or such Lender, as the case may be) on behalf of and in the name of the Administrative Agent or such Lender;
(iii) in the case of any Tax other than an Excluded Tax, the sum payable by the Borrower in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, the Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and
(iv) within 30 days after paying any sum from which it is required by law to make any deduction or withholding, and within 30 days after the due date of payment of any Tax which it is required by clause (b) above to pay, the Borrower shall deliver to the Administrative Agent evidence reasonably satisfactory to the affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority.
If any additional amounts are payable in respect of Taxes pursuant to clause (iii) above, the Borrower agrees to indemnify each Lender, the Administrative Agent and their successors, assigns and Affiliates for such Taxes required to be deducted or withheld and to reimburse such Persons, upon the written request of such Person, for the net increase in Tax imposed on or measured by the net income or net profits of such Lender (after taking into account current credits and deductions resulting from such Tax liability) pursuant to the laws of the jurisdiction in which such Lender is organized or in which the principal office or applicable Lending Office of such Lender is located or under the laws of any political subdivision or taxing authority of any such jurisdiction in which such Lender is organized or in which the principal office or applicable Lending Office of such Lender is located or in which such Lender is doing business (if the Taxes imposed on the net income, net profits or net gains of such Lender by such jurisdiction in which a Lender is doing business are treated as Excluded Taxes under this Agreement) and for any withholding of Taxes as such Lender shall reasonably determine are payable by, or withheld from, such Lender in respect of such amounts so paid to or on behalf of such Lender pursuant to clause (iii) above and in respect of any amounts paid to or on behalf of such Lender pursuant to this sentence. Notwithstanding the foregoing provisions of this Section 5.3(b), no such additional amount shall be required to be paid to any Lender
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under clause (iii) above in respect of United States federal withholding taxes except to the extent that such obligation to deduct or withhold results from a change, after the date hereof in applicable law, treaty, or governmental rule, regulation or order, or any change in the official interpretation, administration or application thereof.
(c) Evidence of Exemption from U.S. Withholding Tax.
(i) Each Lender that is organized under the laws of any jurisdiction other than the United States or any state or other political subdivision thereof shall, to the extent it is entitled to do so, deliver to the Administrative Agent for transmission to the Borrower, at or prior to the Closing (in the case of each Lender listed on the signature pages hereof) or on or prior to the date of the Transfer Supplement pursuant to which it becomes a Lender (in the case of each other Lender), (x) two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Internal Revenue Code or the regulations issued thereunder to establish that such Lender is entitled to an exemption or reduction in the amount of United States federal income tax required to be deducted or withheld from any payments to such Lender of interest, fees or other amounts payable under any of the Transaction Documents or (y) if such Lender is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver either Internal Revenue Service Form W-8BEN claiming exemption under a treaty or W-8ECI, pursuant to clause (x) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8BEN (or any successor form), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Internal Revenue Code or the regulations issued thereunder to establish that such Lender is entitled to an exemption or reduction in the amount of United States federal income tax required to be withheld from payments to such Lender of interest payable under any of the Transaction Documents.
Each Lender that is organized under the laws of the United States or any state or other political subdivision thereof that is not a corporation shall deliver to the Administrative Agent for transmission to the Borrower, at or prior to the Closing (in the case of each Lender listed on the signature pages hereof) or on or prior to the date of the Transfer Supplement pursuant to which it becomes a Lender (in the case of each other Lender), two original copies of Internal Revenue Service Form W-9 (or any successor form), properly completed and duly executed by such Lender, if requested by the Borrower in writing and required by the Internal Revenue Code or the regulations issued thereunder to permit the Borrower to pay to or for the account of such Lender interest, fees or other amounts pursuant to any of the Transaction Documents without deducting or withholding any United States federal income tax from such payment.
(ii) Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters
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pursuant to Section 5.3(c)(i) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, that such Lender, to the extent it is entitled to do so, shall promptly after receipt of the Borrower’s written request therefor (x) deliver to the Administrative Agent for transmission to the Borrower two new original copies of Internal Revenue Service Form W-8BEN or W-8ECI or W-9, or a Certificate re Non-Bank Status and two original copies of Internal Revenue Service Form W-8BEN, as the case may be, properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required in order to confirm or establish that such Lender is entitled to an exemption or reduction in the amount of United States federal income tax required to be withheld from payments to such Lender under the Transaction Documents or (y) notify the Administrative Agent and the Borrower of its inability to deliver any such forms, certificates or other evidence in which case such Lender shall not be required to deliver any such form or certificate pursuant to this Section 5.3(c).
(iii) The Borrower shall not be required to pay any additional amount to any Lender under clause (iii) of Section 5.3(b) if such Lender shall have failed to satisfy the requirements of clause (i) or (ii)(x) of this Section 5.3(c); provided that if such Lender shall have satisfied the requirements of Section 5.3(c)(i) at or prior to the Closing (in the case of each Lender listed on the signature pages hereof) or on the date of the Transfer Supplement pursuant to which it became a Lender (in the case of each other Lender), nothing in this Section 5.3(c)(iii) shall relieve the Borrower of its obligation to pay any additional amounts pursuant to Section 5.3(b) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described in Section 5.3(c)(i) or (ii).
(iv) If the Borrower pays any additional amount under this Section 5.3 to a Lender and such Lender determines in its sole discretion that it has actually realized in connection therewith a net cash benefit (including a net cash benefit which the relevant taxing authority applies to satisfy any liability of such Lender for Excluded Taxes) due to any refund or any reduction of, or credit against, its liabilities for Excluded Taxes in any taxable year, provided no Special Default or Event of Default shall have occurred and be continuing, such Lender shall, to the extent it can do so without prejudice to the retention of such benefit, pay to the Borrower an amount that the Lender shall, in its sole discretion, determine is equal to such net cash benefit which was obtained by the Lender in such year as a consequence of such refund, reduction or credit realized in connection with the payment of such additional amount.
Section 5.4. Other Taxes. In addition to the amounts described elsewhere in this Article V, the Borrower shall pay, and indemnify, and hold harmless on a net after-tax basis each Lender and the Administrative Agent from and against all Other Taxes
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(other than Excluded Taxes) which arise from any payment made hereunder or under any other Transaction Document or from the execution, delivery, registration, filing, recording, performance or enforcement of, or otherwise with respect to, this Agreement or any other Transaction Document or otherwise in connection with or as a result of the transactions contemplated by the Transaction Documents.
Section 5.5. General Indemnity. The Borrower agrees to indemnify and hold harmless each Lender, the Administrative Agent, and their respective successors, assigns, directors, officers, employees, members, shareholders, representatives and agents (hereinafter in this Section 5.5 referred to individually as an “Indemnitee,” and collectively as “Indemnitees”) on an after-tax basis against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, suits, judgments and any and all costs and expenses (including reasonable attorneys’ fees, disbursements and other charges) (for the purposes of this Section 5.5 the foregoing are collectively called “Losses”) of whatsoever kind and nature imposed on, or incurred or suffered by any of the Indemnitees in any way relating to, or arising out of, or by reason of any investigation, assertion of a claim or demand for Losses, litigation, or other proceedings (including any threatened investigation, litigation or other proceedings) relating to either (or both) Senior Mortgages, or the exercise or enforcement by the Administrative Agent of any of the terms, rights, or remedies thereunder, or in any way relating to or arising out of the manufacture, ownership, ordering, purchase, delivery, control, acceptance, lease, possession, operation, condition, sale, return or other disposition, or use of the Collateral (including latent or other defects, whether or not discoverable), the violation of the Laws of any country, state or other governmental authority with respect to or arising otherwise in connection with the Collateral, or any tort (including claims arising or imposed under the doctrine of strict liability, or for or on account of injury to or the death of any Person (including any Indemnitee), or property damage) with respect to or arising otherwise in connection with the Collateral (but excluding any such Losses to the extent incurred by reason of (i) the gross negligence or willful misconduct of such Indemnitee, (ii) Taxes, reserve requirements or similar regulatory requirements imposed by banking authorities except as otherwise provided in Sections 5.1, 5.2, 5.3 and 5.4 hereof, (iii) breaches by such Indemnitee of any Transaction Document to which it is a party or (iv) to the extent attributable to the failure of the Administrative Agent to distribute funds received and distributable by it in accordance any such Transaction Documents).
Section 5.6. Replacement of Lenders. In the event any Lender that is not a GE Affiliate exercises its rights pursuant to Article V or requests payment pursuant to this Article V, the Borrower may require, at the Borrower’s expense, such Lender to assign, at par plus accrued interest and any other amounts payable to it hereunder, without recourse all of its interests, rights and obligations hereunder (including all of its Commitment and the Loans and other amounts at the time owing to it hereunder and its Notes) to a bank, financial institution or other entity specified by the Borrower, provided that (i) such assignment shall not conflict with or violate any law, rule or regulation or order of any court or other Governmental Authority, (ii) the Borrower shall have received the written consent of the Administrative Agent, which consent shall not be unreasonably withheld, to such assignment, and (iii) the Borrower shall have paid to the assigning Lender all principal, interest and any other amounts payable to it hereunder. For the avoidance of
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doubt, the Borrower expressly acknowledges and agrees that its rights under this Section 5.6 do not apply with respect to any Lender that is a GE Affiliate, even if such Lender exercises any rights pursuant to this Article V or requests payment pursuant to this Article V.
CONDITIONS PRECEDENT
Section 6.1. General Conditions . The obligation of the Lenders to make the Loans is subject to the condition that, on or prior to the Funding Date:
(a) The Borrower shall have delivered to the Administrative Agent (with a copy for each Lender that is a party hereto on the Funding Date) the following:
(i) an executed counterpart of this Agreement;
(ii) an executed counterpart of the Engine Mortgage (including Mortgage Supplement No. 1 with respect thereto);
(iii) an executed counterpart of the Spare Parts Mortgage;
(iv) an executed counterpart of the Guaranty;
(v) an executed counterpart of the Payment and Indemnity Agreement;
(vi) an executed counterpart of the Subordinated Engine Mortgage (including the Mortgage Supplement No. 1 with respect thereto);
(vii) an executed counterpart of the Subordinated Spare Parts Mortgage;
(viii) an executed counterpart of the Collateral Agent Agreement;
(ix) opinions of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to the Borrower and the Guarantor, and Xxxxxxx X. Xxxxxxx, Esq., general counsel of the Borrower and the Guarantor, in form and substance reasonably satisfactory to the Administrative Agent;
(x) an opinion of FAA Counsel in form and substance reasonably satisfactory to the Administrative Agent; and
(xi) (1) a certificate of the Secretary or an Assistant Secretary of the Borrower certifying (i) the resolutions of the Borrower’s board of directors or executive committee of such board approving the transactions contemplated by this Agreement and the other Transaction Documents and the Subordinated Documents, (ii) the name and signature of each officer who executes a Transaction Document or Subordinated Document on the Borrower’s behalf (on
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which certificate the Administrative Agent and each Lender may conclusively rely until a revised certificate is received), (iii) the Borrower’s articles of incorporation certified by the Secretary of State of the State of California within ten days prior to the Funding Date, (iv) a copy of the Borrower’s By-Laws and (2) a good standing certificate of the Borrower from the Secretary of State of the State of California dated within ten days prior the Funding Date;
(xii) (1) a certificate of the Secretary or an Assistant Secretary of the Guarantor certifying (i) the resolutions of the Guarantor’s board of directors or executive committee of such board approving the transactions contemplated by the Guaranty, (ii) the name and signature of each officer who executes a Transaction Document or Subordinated Document on the Guarantor’s behalf (on which certificate the Administrative Agents and each Lender may conclusively rely until a revised certificate is received), (iii) the Guarantor’s certificate of incorporation certified by the Secretary of State of the State of Delaware within ten days prior to the Funding Date, and (iv) a copy of the Guarantor By-Laws and (2) a good standing certificate of the Guarantor from the Secretary of State of the State of Delaware dated within ten days prior to the Funding Date.
Section 6.2. Additional Conditions . The obligation of the Lenders to make the Loans is subject to the fulfillment, prior to or on the Funding Date, of the following additional conditions precedent:
(a) The Administrative Agent shall have received the following documents (with a copy for each Lender that is a party hereto as of the Funding Date):
(i) (1) a Series A Note, duly executed by the Borrower, in an original principal amount equal to each Lender’s Series A Commitment and (2) a Series B Note, duly executed by Borrower, in an original principal amount equal to the each Lender’s Series B Commitment shall have been issued to each Lender that is advancing funds on the Funding Date;
(ii) the broker’s report and insurance certificate required by Appendix B of the Spare Parts Mortgage and the Subordinated Spare Parts Mortgage with respect to the Pledged Spare Parts, and the broker’s report and insurance certificate required by Appendix B of the Engine Mortgage and the Subordinated Engine Mortgage with respect to the Engines;
(iii) with respect to each Engine, a copy of the original xxxx(s) of sale or manufacturer’s invoice(s), evidencing chain of title back to the manufacturer, or other evidence of ownership reasonably satisfactory to the Administrative Agent;
(iv) an Officer’s Certificate of the Borrower, dated as of the Funding Date, stating that its representations and warranties set forth in Sections 3.1 and 3.2 of this Agreement are true and correct as of the Funding Date (or, to the extent that any such representation and warranty expressly relates to an earlier date, true and correct as of such earlier date);
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(v) the Financing Statements;
(vi) the UCC Termination Statements, if any;
(vii) the Releases, if any; and
(viii) the written consent and acknowledgement of the vendor or licensor of the Software currently used by the Borrower to track its spare parts inventory to the interests of the Administrative Agent and the Collateral Agent in such Software, which consent shall include and express grant of a license by such vendor to the Administrative Agent and the Collateral Agent for the use of such Software following the occurrence of an Event of Default and shall be in form and substance satisfactory to the Lenders in their sole discretion.
(b) On the Funding Date, after giving effect to the filing of the FAA Filed Documents, the Financing Statements and the UCC Termination Statements (if any), (i) the Administrative Agent shall have received a duly perfected first priority security interest in all of the Borrower’s right, title and interest in the Collateral subject only to Permitted Liens that are not Liens of Record, and (ii) the Collateral Agent shall have received a duly perfected second priority security interest in all of the Borrower’s right, title and interest in the “collateral” described in each Subordinated Mortgage, subject only to the Lien of the applicable Senior Mortgage and other Permitted Liens (as defined in such Subordinated Mortgage) that are not Liens of Record.
(c) No change shall have occurred after the date of this Agreement in any applicable law that makes it a violation of law for (a) the Borrower, the Guarantor, the Administrative Agent, the Collateral Agent, any Lender or any Beneficiary to execute, deliver and perform the Transaction Documents and Subordinated Documents to which it is a party or (b) any Lender to make the Loans on the terms and conditions contemplated by the Transaction Documents.
(d) On the Funding Date, no event shall have occurred and be continuing, or would result from the mortgage of the Collateral, which constitutes an Event of Default or a Potential Default.
(e) The Borrower shall have good title to the Engines and the Pledged Spare Parts, in each case free and clear of all Liens, except Permitted Liens which are not Liens of Record. With respect to each Designated Location that is leased (including any ground lease and any lease of any temporary buildings or the like) or subleased by the Borrower, the Borrower shall have obtained from the Borrower’s immediate landlord, and if requested by the Administrative Agent, from each landlord in the chain back to the owner of the real property and the owner of the improvements (whether permanent or temporary, if separate from the real property), a waiver of any and all right or interest that such Person may otherwise have in the Pledged Spare Parts and such Person’s consent, if applicable, to access by the Administrative Agent, the Collateral Agent and/or any
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Lender or any representative of any of them to the premises in connection with the exercise of any rights or remedies under or pursuant to the Senior Mortgages and the Subordinated Mortgages (in each case, in form and substance satisfactory to the Lenders). In addition, with respect to each Designated Location owned by the Borrower or any of its Affiliates, if any, the Borrower shall have obtained from each other Person that may have an interest in the real property and/or the improvements (whether permanent or temporary improvements) at such location (whether as mortgagee or otherwise) a waiver of any and all right or interest that such Person may otherwise have in the Pledged Spare Parts and such Person’s consent, in the event that such Person shall have obtained possession and control of the relevant premises from the Borrower or the Borrower’s Affiliate (whether upon foreclosure or other exercise of remedies by such Person or otherwise), to access by the Administrative Agent, the Collateral Agent and/or any Lender or any representative of any of them to the premises in connection with the exercise of any rights or remedies under or pursuant to the Senior Mortgages and the Subordinated Mortgages (in each case, in form and substance satisfactory to the Lenders).
(f) The Administrative Agent is and will be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Engines, Engine Documents, Pledged Spare Parts (other than the Identified Spare Parts) and Spare Parts Documents (other than the Spare Parts Documents relating to the Identified Spare Parts) in the event of a case under Chapter 11 of the Bankruptcy Code in which the Borrower is a debtor .
(g) On the Funding Date, (i) the FAA Filed Documents shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the FAA in accordance with the Act and (ii) each Financing Statement and each UCC Termination Statement (if any) shall have been duly filed (or shall be in the process of being so duly filed) in the appropriate jurisdiction.
(h) No action or proceeding shall have been instituted, nor shall any action be threatened in writing, before any Governmental Authority, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority, to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or any other Transaction Document or any Subordinated Document or the transactions contemplated hereby or thereby.
(i) The representations and warranties in Sections 3.1 and 3.2 shall be true and correct in all material respects on and as of such date (except to the extent such representations and warranties relate solely to an earlier date but then as of such earlier date).
(j) The Borrower shall have paid (i) to the Administrative Agent the fee referenced in Section 1.3, and (ii) the person or persons entitled thereto all amounts referred to in the first sentence of Section 9.3 for which it shall have
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received reasonably detailed invoices at least two Business Days before the Funding Date.
(k) No payment default (without giving effect to any grace period) by Borrower shall have occurred and be continuing under any of the IAI Operative Documents (as defined in the Payment and Indemnity Agreement) or any agreement to which the Borrower and any Lender or any Lender’s Subsidiaries are parties (or any agreement to which the Borrower is a party relating to the same transaction as any such agreement).
(l) No payment default by the Borrower currently exists with respect to any financing facility of $250,000 or more and the Administrative Agent and the Lenders shall have received a certification from the Borrower to such effect.
(m) (i) The Restructuring Transactions shall have been documented in definitive documentation satisfactory to the Lenders and the Beneficiaries, as applicable, in their sole discretion, and (ii) either (x) all of the Restructuring Transactions shall have been fully consummated in a manner satisfactory to the Lenders and the Beneficiaries, as applicable, in their sole discretion or (y) any Restructuring Transactions not yet consummated shall be ready to be consummated contemporaneously with the funding of the Loans hereunder and all conditions precedent to the effectiveness and consummation thereof shall have been satisfied (or waived) in a manner satisfactory to the Lenders and the Beneficiaries, as applicable, in their sole discretion.
(n) The Administrative Agent shall have received an Appraisal (using the Physical Appraisal Methodology) with respect to the Pledged Spare Parts from the Independent Appraiser, satisfactory in form and substance in the sole discretion of the Administrative Agent, as well as (x) an Officer’s Certificate of the Independent Appraiser substantially in the form of Appendix E to the Spare Parts Mortgage, and (y) an Officer’s Certificate of the Borrower substantially in the form of Appendix C to the Spare Parts Mortgage; and the following shall be true:
(i) The Current Market Value of the Pledged Spare Parts (excluding those Spare Parts which are either in transit or out for repair and consequently not located at a Designated Location) reflected in such Appraisal shall not be less than $[***]; and
(ii) The Current Market Value of the Rotables and the Repairables (excluding in each case those Rotables and Repairables which are either in transit or out for repair and consequently not located at a Designated Location) reflected in such Appraisal shall be such that the Series B Commitment shall be equal to or less than the sum of (x) [***]% of the Current Market Value of the Rotables (excluding those Rotables which are either in transit or out for repair and consequently not located at a Designated Location) reflected in such Appraisal, and (y) [***]% of the
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Current Market Value of the Repairables (excluding those Repairables which are either in transit or out for repair and consequently not located at a Designated Location) reflected in such Appraisal.
(o) The Administrative Agent shall have received an Officer’s Certificate of the Borrower certifying the maintenance status (including hours and cycles since last overhaul) of each Engine, which certification may be in the form of an Engine Report, and the Engines shall have a Current Market Value (as determined by the Administrative Agent in accordance with the procedures set forth in Section 4.1(g)(ii) above, based upon reports dated September 2004 as to the current market value of the engines of like make and model from three independent appraisers chosen by the Administrative Agent in its sole discretion and the maintenance status of the Engines as so certified by the Borrower) of not less than $[***] in the aggregate.
(p) On the Funding Date after the Loans have been made, (i) the Collateral Ratio shall be no greater than the Maximum Collateral Ratio, (ii) the Rotables Ratio shall be no greater than the Maximum Rotables Ratio, (iii) the LDTV Ratio shall be no greater than the Maximum LDTV Ratio and (iv) the Lenders shall have received one or more Officer’s Certificates of the Borrower to such effect, which certification may be in the form of the Appraisal Compliance Report (as defined in the Spare Parts Mortgage) and the LDTV Compliance Report, in each case shall include an express certification by the Borrower as to the accuracy and completeness of all information and data provided by the Borrower to the Independent Appraiser for the preparation of the Appraisal referenced therein; and
(q) Such other documents relating to the Loans contemplated hereby as the Administrative Agent or any Lender may reasonably request.
EVENTS OF DEFAULT
Section 7.1. Events of Default. Each of the following events shall constitute an “Event of Default,” whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body:
(a) The Borrower shall fail to make any payment of principal of or interest on any Loan or LIBOR Breakage Costs within five Business Days after the same shall have become due hereunder; or
(b) The Borrower or the Guarantor shall fail to pay any other amount payable hereunder or under any other Transaction Document when due and such failure shall continue for a period of ten Business Days after the same shall have become due hereunder or under such other Transaction Document; or
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(c) Any representation or warranty made by the Borrower or the Guarantor in this Agreement or any other Transaction Document, or in any report, certificate or other document prepared by the Borrower or the Guarantor, and furnished pursuant to or in connection with this Agreement or any other Transaction Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder shall prove to have been incorrect in any material respect when made, such incorrect representation or warranty is material at the time in question, and, if curable, the same shall remain uncured for a period in excess of 30 days after the date of written notice thereof from the Administrative Agent or any Lender; or
(d) The Borrower or the Guarantor shall fail to perform or observe any term, covenant or agreement contained in this Agreement or any other Transaction Document on its part to be performed or observed and such failure shall remain unremedied for a period of 30 days after written notice of such failure shall have been given to the Borrower by the Administrative Agent or any Lender, unless such failure is capable of being corrected and the Borrower shall be diligently proceeding to correct such failure, in which case there shall be no Event of Default unless and until such failure shall continue unremedied for a period of 60 days after receipt of such notice; or
(e) The Borrower or the Guarantor shall consent to the appointment of or the taking of possession by a receiver, trustee or liquidator of itself or of substantially all of its property, or the Borrower or the Guarantor shall admit in writing its inability to pay its debts generally as they come due, or does not pay its debts generally as they become due or shall make a general assignment for the benefit of creditors, or the Borrower or the Guarantor shall file a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization, liquidation or other relief in a case under any bankruptcy laws or other insolvency laws (as in effect at such time), or the Borrower or the Guarantor shall seek relief by voluntary petition, answer or consent, under the provisions of any other bankruptcy or other similar law providing for the reorganization or winding-up of corporations (as in effect at such time) or the Borrower’s or the Guarantor’s board of directors shall adopt a resolution authorizing any of the foregoing;
(f) An order, judgment or decree shall be entered by any court of competent jurisdiction appointing, without the consent of the Borrower or the Guarantor as the case may be, a receiver, trustee or liquidator of the Borrower or the Guarantor or of substantially all of their respective property, or substantially all of the property of the Borrower or the Guarantor shall be sequestered, and any such order, judgment or decree of appointment or sequestration shall remain in force undismissed, unstayed and unvacated for a period of 60 days after the date of entry thereof; or a petition against the Borrower or the Guarantor in a case under any bankruptcy laws or other insolvency laws (as in effect at such time) is filed and not withdrawn or dismissed within 60 days thereafter, or if, under the provisions of any law providing for reorganization or winding-up of corporations which may apply to the Borrower or the Guarantor, any court of competent
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jurisdiction assumes jurisdiction, custody or control of the Borrower or the Guarantor, or of substantially all of the property of the Borrower or the Guarantor and such jurisdiction, custody or control remains in force unrelinquished, unstayed and unterminated for a period of 60 days; or
(g) The Borrower shall fail to carry and maintain, or cause to be carried and maintained, insurance on and in respect of the Engines and/or the Pledged Spare Parts in accordance with the provisions of Section 3.05 of the Engine Mortgage and the Spare Parts Mortgage, respectively; or
(h) The Borrower shall cease to be a Certificated Air Carrier; or
(i) Any Senior Mortgage shall for any reason cease to be a valid first priority perfected security interest (subject to Permitted Liens) in favor of the Administrative Agent in the Borrower’s right, title and interest in and to the Collateral described in such Senior Mortgage under the laws of the United States of America; or
(j) an “Event of Default” as defined in any of the GE Deferral Leases or any of the Early Termination Leases shall have occurred and be continuing; provided, however, it is expressly acknowledged and agreed that none of the occurrence of a Trigger Event, the termination of any GE Deferral Lease upon the occurrence of a Trigger Event pursuant to the Milestone Agreement, or the implementation of any other remedy expressly contemplated by the Milestone Agreement or by any other agreement (including but not limited to an omnibus amendment agreement) executed pursuant to the Milestone Agreement on account of the occurrence of a Trigger Event shall be deemed to constitute an Event of Default under this subclause (j); provided, further, however, that, notwithstanding the immediately preceding proviso, any failure by the Borrower or the Guarantor to comply with its obligations under the Milestone Agreement, under any other agreement (including but not limited to an omnibus amendment agreement) executed pursuant to the Milestone Agreement on account of the occurrence of a Trigger Event, or under any GE Deferral Lease or any Early Termination Lease as amended by any such omnibus amendment agreement on account of such Trigger Event, including, but not limited to, any failure to return the applicable aircraft to the lessor thereof following the termination of the lease in respect thereof, shall constitute an Event of Default hereunder to the same extent (and subject to the same grace periods) as such failure constitutes an Event of Default under the applicable Early Termination Lease or GE Deferral Lease; or
(k) a “Subordinated Event of Default” shall have occurred and be continuing under any of the Subordinated Documents.
then, if an Event of Default referred to in clause (e) or (f) of this Section 7.1 shall have occurred and be continuing, (x) the principal of the Loans then outstanding, together with interest accrued but unpaid thereon, LIBOR Breakage Costs, and all other amounts owing to the Administrative Agent and any Lender hereunder or under any other Transaction
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Document, shall immediately and without further act become due and payable, and (y) the Commitments, to the extent not previously terminated, shall automatically terminate, in each case without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower and, if any other Event of Default shall have occurred and be continuing, then the Administrative Agent shall, upon request of the Required Lenders, by notice to the Borrower, terminate the Commitments and declare the unpaid principal of the Loans then outstanding, together with interest accrued but unpaid thereon, LIBOR Breakage Costs and all other amounts due to the Administrative Agent and any Lender hereunder or under any other Transaction Document, to be forthwith due and payable, whereupon the Commitments shall terminate and the Loans, all such interest and all other amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower. In addition to any other remedies available to the Administrative Agent and the Lenders under the Transaction Documents or at law or otherwise, if an Event of Default shall have occurred and so long as the same shall be continuing unremedied, then and in every such case the Administrative Agent may exercise any or all of the rights and powers and pursue any and all of the remedies set forth in the Senior Mortgages.
THE ADMINISTRATIVE AGENT
Section 8.1. Appointment and Authorization. Each Lender hereby irrevocably designates and appoints General Electric Capital Corporation as the “Administrative Agent” under the Transaction Documents and authorizes the Administrative Agent to take such actions and to exercise such powers as are delegated to it thereby and to exercise such other powers as are reasonably incidental thereto, including but not limited to serving as the “Secured Party” on behalf of the Lenders under the Senior Mortgages and documents and instruments relating thereto. The Administrative Agent shall not have any duties other than those expressly set forth in a Transaction Document or any fiduciary relationship with any Lender, and no implied obligations or liabilities shall be read into this Agreement, or otherwise exist, against the Administrative Agent. The Administrative Agent does not assume, nor shall it be deemed to have assumed, any obligation to, or relationship of trust or agency with, the Borrower. Notwithstanding any provision of this Agreement or any other Transaction Document, in no event shall the Administrative Agent ever be required to take any action which exposes it to personal liability or which is contrary to the provision of any Transaction Document or applicable law.
Section 8.2. Delegation of Duties. The Administrative Agent may execute any of its duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.
Section 8.3. Exculpatory Provisions. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to any Lender for any action taken or omitted (i) with the consent or at the direction of the Required Lenders or (ii) in the absence of such Person’s gross negligence or willful misconduct. The
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Administrative Agent shall not be responsible to any Lender or other Person for (a) any recitals, representations, warranties or other statements made by the Borrower or any of its Affiliates, (b) the value, validity, effectiveness, genuineness, enforceability or sufficiency of any Transaction Document, (c) any failure of the Borrower or any of its Affiliates to perform any obligation or (d) the satisfaction of any condition specified in Article VI. The Administrative Agent shall not have any obligation to any Lender to ascertain or inquire about the observance or performance of any agreement contained in any Transaction Document or to inspect the properties, books or records of the Borrower or any of its Affiliates.
Section 8.4. Reliance by Administrative Agent. As between the Administrative Agent and the Lenders, the Administrative Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document, other writing or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person and upon advice and statements of legal counsel (including counsel to the Borrower or any of its Affiliates), independent accountants and other experts selected by the Administrative Agent. The Administrative Agents shall in all cases be fully justified in failing or refusing to take any action under any Transaction Document unless it shall first receive such advice or concurrence of the Lenders, and assurance of its indemnification, as it deems appropriate. Subject to Section 9.1, the Administrative Agent shall not effect any waiver or grant any consent or make any determination without the direction of the Required Lenders.
Section 8.5. Notice of Events of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Potential Default or Event of Default unless it has received notice from any Lender or the Borrower stating that a Potential Default or Event of Default has occurred hereunder and describing such Potential Default or Event of Default. Promptly upon receiving notice of the occurrence of any Potential Default or Event of Default, the Administrative Agent shall notify each Lender of such occurrence. The Administrative Agents shall take such action concerning a Potential Default or Event of Default as may be directed by the Required Lenders (or, if required for such action, all of the Lenders), but until the Administrative Agent receives such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, as the Administrative Agent deems advisable and in the best interests of the Lenders.
Section 8.6. Non-Reliance on Administrative Agent and Other Lenders; Lender Representations. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Borrower, the Guarantor or any of their Affiliates, shall be deemed to constitute any representation or warranty by the Administrative Agent. Each Lender represents and warrants to the Administrative Agent that, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, it has made and will continue to make its own appraisal of and investigation into the business, operations, property, prospects, financial and other
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conditions and creditworthiness of the Borrower and the Guarantor and its own decision to enter into this Agreement and to take, or omit, action under any Transaction Document. Except for items specifically required to be delivered hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any information concerning the Borrower, the Guarantor or any of their Affiliates that comes into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
Section 8.7. Administrative Agent and Affiliates. The Administrative Agent and its Affiliates may extend credit to, accept deposits from and generally engage in any kind of business with the Borrower or any of its Affiliates and, in its role as a Lender, General Electric Capital Corporation may exercise or refrain from exercising its rights and powers as if it were not Administrative Agent.
Section 8.8. Indemnification. Each Lender shall indemnify and hold harmless the Administrative Agent and its officers, directors, employees, representatives and agents (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably in accordance with its Percentage Share (or, after the Commitments have been terminated, its Ratable Share) from and against any and all liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses and disbursements of any kind whatsoever (including in connection with any investigative or threatened proceeding, whether or not the Administrative Agent or such Person shall be designated a party thereto) that may at any time be imposed on, incurred by or asserted against the Administrative Agent or such Person as a result of, or related to, any of the transactions contemplated by the Transaction Documents or the execution, delivery or performance of the Transaction Documents or any other document furnished in connection therewith (but excluding any such liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Administrative Agent or such Person as finally determined by a court of competent jurisdiction).
Section 8.9. Successor Administrative Agent. The Administrative Agent may, upon at least 30 days notice to the Borrower and each Lender, resign its position as the Administrative Agent. Such resignation shall not become effective until a successor Administrative Agent acceptable to the Borrower is appointed by the Required Lenders and has accepted such appointment. Upon such acceptance of its appointment as the Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall succeed to and become vested with all the rights and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under the Transaction Documents. After any retiring Administrative Agent’s resignation hereunder, the provisions of Article V and this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent.
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MISCELLANEOUS
Section 9.1. Amendments. Neither this Agreement nor any other Transaction Document nor any terms hereof or thereof may be changed, waived, discharged or terminated (excluding any mortgage supplements or supplemental mortgages contemplated by and executed and delivered pursuant to the Engine Mortgage or the Spare Parts Mortgage, respectively) unless such change, waiver, discharge or termination is in writing signed by the Borrower and the Required Lenders, provided that no such change, waiver, discharge or termination shall, without the consent of each Lender affected thereby, (i) extend the final scheduled maturity of any Loan or any Note, or reduce the rate or extend the time of payment of interest or fees thereon, or reduce or extend the time of payment of the principal amount thereof (except to the extent, and under the circumstances, specified in Section 1.1(d)(iii)), (ii) increase the Commitment of any Lender, (iii) release any Collateral (except as expressly provided in the applicable Senior Mortgage), (iv) amend, modify or waive any provision of this Section 9.1, (v) reduce the percentage specified in the definition of Required Lenders, (vi) consent to the assignment or transfer by the Borrower or the Guarantor of any of its rights and obligations under this Agreement or the other Transaction Documents or (vii) impair any indemnity under a Transaction Document in favor of such Lender; provided, further, that no such change, waiver, discharge or termination shall, without the consent of the Administrative Agent, amend, modify or waive any provision of Article VIII or any other provision as same relates to the rights or obligations of the Administrative Agent.
Section 9.2. Notices. Unless otherwise specified, all notices and other communications hereunder shall be in writing (including by facsimile communication), given to the appropriate Person at its address or facsimile number set forth on the signature pages hereof or at such other address or facsimile number as such Person may specify, and effective when received at the address specified by such Person. The number of days for any advance notice required hereunder may be waived (orally or in writing) by the Person receiving such notice.
Section 9.3. Costs and Expenses. The Borrower hereby agrees to pay at or prior to the Closing after receipt of reasonably detailed invoices, all reasonable and actual costs and expenses of the initial Lenders and the Administrative Agent in connection with the preparation, execution and delivery of the Transaction Documents and the Subordinated Documents (whether or not any such Transaction Document or Subordinated Document is entered into), including, without limitation the reasonable fees and expenses of (a) Holland & Knight LLP, special counsel to the initial Lenders and the Beneficiaries, (b) Weil, Gotshal & Xxxxxx, special bankruptcy counsel to the Lenders, (c) FAA Counsel, and (d) the Independent Appraiser (but, solely in the case of the Independent Appraiser, its fees payable by the Borrower under this subclause (d) shall not exceed $115,000). The Borrower further agrees to pay on demand all reasonable and actual costs and expenses of the Administrative Agent and the Lenders, if any (including, without limitation, reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of the Transaction Documents after the occurrence of an Event of Default.
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Section 9.4. Certain Agreements . (a) Each Lender and the Administrative Agent agrees as to itself with the Borrower that, so long as no Event of Default shall have occurred and be continuing, such person shall not (and shall not permit any Affiliate or other person claiming by, through or under it to) take or cause to be taken any action contrary to the Borrower’s right to quiet enjoyment of the Collateral, and to possess, use, retain and control the Engines and the Pledged Spare Parts and all revenues, income and profits derived therefrom without hindrance.
(b) Each Lender agrees to comply with its obligations under the Senior Mortgages.
Section 9.5. Entire Agreement. The Transaction Documents and the Subordinated Documents constitute the entire understanding of the parties thereto concerning the subject matter thereof. Any previous agreements, whether written or oral, concerning such matters are superseded thereby.
Section 9.6. Cumulative Rights and Severability. All rights and remedies of the Lenders and the Administrative Agent hereunder shall be cumulative and non-exclusive of any rights or remedies such Persons have under law or otherwise. Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, in such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and without affecting such provision in any other jurisdiction.
Section 9.7. Waivers. No failure or delay of any party hereto in exercising any power, right, privilege or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right, privilege or remedy preclude any other or further exercise thereof or the exercise of any other power, right, privilege or remedy. Any waiver hereof shall be effective only in the specific instance and for the specific purpose for which such waiver was given. After any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former position and rights and any Potential Default or Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to (or impair any right consequent upon) any subsequent or other Potential Default of Event of Default.
Section 9.8. Successors and Assigns; Participations; Assignments.
(a) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Except as otherwise provided herein, the Borrower may not assign or transfer any of its rights or delegate any of its duties without the prior consent of the Administrative Agent and each of the Lenders.
(b) Participations. Any Lender may sell to one or more Persons (each a “Participant”) participating interests in the interests of such Lender hereunder. Such Lender shall remain solely responsible for performing its obligations hereunder, and the Borrower and the Administrative Agent shall continue to deal solely and directly with
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such Lender in connection with such Lender’s rights and obligations hereunder (without any consent required from any Participant). Each Participant shall be entitled to the benefits of Article V; provided that such Participant shall not be entitled to any greater benefit under Article V than the Lender that sold the participating interest to the Participant would have been entitled to thereunder and no Participant shall be entitled to any benefit thereunder unless it shall perform such obligations as are imposed on the Lenders under Article V; provided further that in the event that any Participant that is not a GE Affiliate exercises any of its rights under Article V or requests payment pursuant to Article V, the Borrower may request, at the Borrower’s expense, that such Participant re-assign its interests to a bank, financial institution or other entity specified by the Borrower, provided that (i) such assignment shall not conflict with or violate any law, rule or regulation or order of any court or other Governmental Authority, (ii) the Borrower shall have received the written consent of both the Administrative Agent and the Lender that granted the participating interest to the Participant initially, which consents shall not be unreasonably withheld, and (iii) the Borrower shall have paid to the Lender that granted the participating interest to the Participant all principal, interest and other amounts then due and payable to such Lender hereunder.
(c) Assignments. Notwithstanding the foregoing, any Lender may assign all or a portion of its Commitment and its outstanding Notes to a Qualified Affiliate of such Lender or assign all, or if less than all, a portion equal to at least $[***] in the aggregate face amount of Notes and of such Commitment (and related Obligations) to one or more Eligible Assignees, each of which assignees referred to in Section 9.8(c) shall become a party to this Agreement as a Lender by execution of a supplement hereto in the form of Exhibit F (a “Transfer Supplement”) hereto, provided that such transfer or assignment will not be effective until recorded by the Administrative Agent on the Register pursuant to Section 9.8(d) hereof. To the extent of any assignment pursuant to this Section 9.8(c) (other than an assignment to a Qualified Affiliate pursuant to the preceding sentence), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Commitment. At the time of each assignment pursuant to this Section 9.8(c) to a Person which is not already a Lender hereunder, the respective assignee Lender shall provide to the Borrower and the Administrative Agent the Internal Revenue Service forms (and, if applicable, a Certificate re Non-Bank Status) required by Section 5.3 (c)(i).
(d) Register. The Borrower hereby designates the Administrative Agent to serve as the Borrower’s agent, solely for purposes of this Section 9.8(d), to maintain a register (the “Register”) on which it will record the registered holder of the Notes of each Series and the registration of transfers of Notes of each Series made pursuant to and in accordance with Section 9.8(c). The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice, and the Administrative Agent shall, reasonably promptly after (a) any person becomes a Lender after the date hereof and (b) any Lender alters or modifies its name or address, notify the Borrower of and deliver to the Borrower a written update of the names and addresses of all Lenders. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrower’s obligations in respect of the Notes held by any Lender. With respect to any Lender, the transfer of the Commitment of such Lender and the rights to the principal of, and interest on, the Notes made pursuant to such
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Commitment shall not be effective until such transfer is recorded on the Register maintained by the Administrative Agent with respect to ownership of such Commitment and Notes and prior to such recordation all amounts owing to the transferor with respect to such Commitment and Notes shall remain owing to the transferor. The registration of assignment or transfer of all or part of the Commitment and the Notes shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Transfer Supplement in accordance herewith. Coincident with the delivery of such a Transfer Supplement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of any Note or Notes, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender such Notes, and thereupon one or more new Notes of the same series of Notes in the same aggregate principal amount shall be issued by the Borrower to the assigning or transferor Lender and/or the new Lender, as appropriate to reflect such assignment. The new Notes shall be authenticated by the Administrative Agent. By execution and delivery hereof, the Borrower requests and directs the Administrative Agent to authenticate and deliver the Notes to be issued hereunder and the Administrative Agent Agrees to do so.
Section 9.9. Confidentiality. Neither the Administrative Agent nor any Lender shall disclose any nonpublic information relating to the Borrower (provided to it by the Borrower) or any Transaction Document to any other Person without the consent of the Borrower, other than (a) to the Administrative Agent’s or Lender’s Affiliates and its officers, directors, employees, agents and advisors and, as contemplated by Section 9.8, to actual or prospective assignees and participants, and then, in all such cases, only with an undertaking by the party to whom such information is disclosed to keep such information confidential, (b) as required by any law, rule or regulation or judicial process, (c) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking, and (d) to the extent reasonably necessary in connection with any dispute related to, or enforcement of, the Transaction Documents.
Notwithstanding anything to the contrary set forth herein or in any other agreement to which the parties hereto are parties or by which they are bound, the obligations of confidentiality contained herein and therein, as they relate to the transactions described in the Transaction Documents (the “Transaction”), shall not apply to the U. S. federal tax structure or U. S. federal tax treatment of the Transaction, and each party hereto (and any employee, representative, or agent of any party hereto) may disclose to any and all persons, without limitation of any kind, the U. S. federal tax structure and U. S. federal tax treatment of the Transaction. The preceding sentence is intended to cause the Transaction to be treated as not having been offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations promulgated under Section 6011 of the Internal Revenue Code of 1986, as amended, and shall be construed in a manner consistent with such purpose. In addition, each party hereto acknowledges that it has no proprietary or exclusive rights to the U. S. federal tax structure of the Transaction or any U. S. federal tax matter or U. S. federal tax idea related to the Transaction.
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Section 9.10. Counterparts. This Agreement may be executed by different parties on any number of counterparts, each of which shall constitute an original and all of which, taken together, shall constitute one and the same agreement.
Section 9.11. Governing Law; Submission to Jurisdiction; Venue.
(a) This Agreement and the rights and obligations of the parties hereunder and thereunder shall be construed in accordance with and be governed by the laws of the State of New York. Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of New York or the United States for the Southern District of New York located in the Borough of Manhattan, and, by execution and delivery of this Agreement or a Transfer Supplement, each party hereto hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each party hereto hereby further irrevocably waives any claim that any such courts lack jurisdiction over such party, and agrees not to plead or claim, in any legal action or proceeding with respect to this Agreement brought in any of the aforesaid courts, that any such court lacks jurisdiction over such party. Each party hereto further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at its address specified pursuant to Section 9.2, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of any party hereto to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against any other party hereto in any other jurisdiction.
(b) Each party hereto hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.
Section 9.12. Waiver of Trial by Jury. To the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any action, proceeding or counterclaim arising out of, or in connection with, any Transaction Document or any matter arising thereunder.
Section 9.13. Effective Date. Although this Agreement is dated as of February 17, 2005, it shall not be effective unless and until executed by the parties listed on the signature pages hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof.
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GENERAL ELECTRIC CAPITAL CORPORATION |
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General Electric Capital Corporation |
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c/o GE Capital Aviation Services, Inc. |
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000 Xxxx Xxxxx Xxxx |
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Xxxxxxxx, Xxxxxxxxxxx 00000 |
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Customer Services |
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INDEPENDENCE AIR, INC. |
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Independence Air, Inc. |
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Executive Offices |
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00000 Xxxxxxxx Xxxxx |
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General Counsel |
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Commitment: |
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Series A Commitment: $8,516,374 |
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CORPORATION |
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Series B Commitment: $7,655,023 |
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Notice Address and Lending Office: |
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General Electric Capital Corporation |
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DEFINITIONS AND OTHER INTERPRETIVE PROVISIONS
1. Definitions. The following terms have the meanings set forth, or referred to, below:
“Acceptable Collateral” means a letter of credit issued by a bank organized under the laws of the United States or any State thereof, or the New York branch of a major international bank, in each case for only so long as its long-term Dollar denominated unsecured debt (or if it does not have long-term unsecured Dollar denominated debt, its parent corporation’s long-term unsecured Dollar denominated debt) carries a rating from Standard & Poor’s of A or better, or another security arrangement that affords at least the same degree of certainty of payment.
“Act” means part A of subtitle VII of title 49, United States Code.
“Actual Knowledge” means, with respect to any Person, actual knowledge of a Vice President or more senior officer of such Person or any other officer of such Person having responsibility for the transactions contemplated by the Transaction Documents.
“Administrative Agent’s Account” means the Administrative Agent’s account number 00-000-000, reference Independence Air Engine and Spare Parts Loan, at Deutsche Bank Trust Company Americas, New York branch, ABA No. 000-000-000, Swift Code BKTRUS 33, or such other account at a bank in the United States designated to the Borrower by the Lender.
“Affiliate” means, with respect to any Person, any other Person, directly or indirectly, controlling, controlled by, or under common control with such Person. For purposes of this definition, “control’’ means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities, by contract or otherwise, and “controlling,” “controlled by,” and “under common control with” have correlative meanings.
“Aggregate Commitment” means the sum of the Aggregate Series A Commitment and the Aggregate Series B Commitment.
“Aggregate Series A Commitment” means the amount set forth in Schedule 3 to this Agreement.
“Aggregate Series B Commitment” means the amount set forth in Schedule 3 to this Agreement.
“Agreement” is defined in the first paragraph of this Agreement.
“Applicable Margin” means [***]% per annum.
1-1
“Appraisal” means a written report as to the Current Market Value of the Pledged Spare Parts prepared by the Independent Appraiser based on either the Desk-Top Appraisal Methodology or the Physical Appraisal Methodology, as the case may be.
“Bankruptcy Code” means Title 11 of the United States Code, as the same may be amended.
“Beneficiaries” has the meaning specified in the Payment and Indemnity Agreement.
“Borrower” is defined in the first paragraph of this Agreement.
“Borrower’s Account” means initially the account set forth in Section 1.2(b) or any subsequent account designated in writing by the Borrower to the Administrative Agent from time to time.
“Business Day” means (i) any day other than a Saturday, Sunday or other day on which banks in New York City or Dulles, Virginia are authorized or required by law to close, and (ii) with respect to all notices and determinations in connection with, and borrowings and payments of principal and interest on the Loans, any day which is a Business Day described in clause (i) above and which is also a day for trading by and between banks in the London interbank Eurodollar market.
“Certificate re Non-Bank Status” means a certificate substantially in the form of Exhibit G annexed hereto.
“Certificated Air Carrier” means a Person holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to Chapter 447 of Title 49, United States Code, for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo.
“Closing” means the time at which the Loans are advanced to the Borrower.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means, collectively, all of the Engine Collateral and the Spare Parts Collateral.
“Collateral Agent” means General Electric Capital Corporation in its capacity as agent for the Beneficiaries with respect to the collateral created and granted by the Borrower under the Subordinated Mortgages.
“Collateral Agent Agreement” means a Collateral Agent Agreement substantially in the form of Exhibit K attached hereto, duly completed and executed by the Collateral Agent and the Beneficiaries.
“Collateral Ratio” has the meaning set forth in the Spare Parts Mortgage.
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“Commitment” means, with respect to any Lender, its commitment to make a Loan (or any portion thereof) pursuant to this Agreement, including without limitation its Series A Commitment and its Series B Commitment as set forth on the signature pages hereto.
“Commitment Termination Date” means February 23, 2005.
“CRJ-200” means Bombardier Inc. model CL600-2B19 aircraft.
“Current Market Value” means (i) with respect to any Pledged Spare Part, its current market value determined on the basis of a hypothetical sale negotiated in an arm’s length free market orderly liquidation transaction between a willing and able seller and a willing and able buyer, neither of whom is under undue pressure to complete the transaction, under then current market conditions, as determined by the Independent Appraiser, and (ii) with respect to any Engine, its current market value determined on the basis of a hypothetical sale negotiated in an arm’s length free market transaction between a willing and able seller and a willing and able buyer, neither of whom is under undue pressure to complete the transaction, under then current market conditions, as determined by the Administrative Agent pursuant to Section 4.1(g)(ii) hereof.
“Default Rate” is defined in Section 2.4.
“Desk-Top Appraisal Methodology” has the meaning set forth in the Spare Parts Mortgage.
“Designated Date” means the day coinciding with the third (3rd) anniversary of the Funding Date.
“Designated Locations” means the locations in the U.S. designated from time to time by the Borrower at which the Pledged Spare Parts may be maintained by or on behalf of the Borrower, which initially shall be the locations set forth on Schedule I to the Spare Parts Mortgage and shall include the additional locations designated by the Borrower pursuant to Section 3.02(b) of the Spare Parts Mortgage.
“Dollar” and “$” means lawful currency of the United States of America.
“Early Termination Leases” means, collectively, (i) the leveraged leases with respect to the CRJ-200 aircraft specified in the definition of Existing Early Termination Agreement, which leases are described in more detail in the Existing Early Termination Agreement, and (ii) the leveraged lease transactions with respect to the ten CRJ-200 aircraft bearing manufacturer’s serial numbers 7500, 7520, 7527, 7528, 7544, 7545, 7561, 7553, 7572 and 7652, in each case as in existence on the date hereof and as the same may be further amended, supplemented, restated or otherwise modified from time to time, but in each case only for so long as a GE Affiliate remains the owner participant thereunder.
“Eligible Assignee” means (i) prior to the termination of the Commitments in full, a Person approved by the Borrower which approval shall not be unreasonably withheld or
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delayed and which approval shall not be required if an Event of Default shall be continuing and (ii) after the termination of the Commitments in full, a bank or other financial institution nominated by a Lender.
“Engine” means any engine described on Schedule 2 to this Agreement and any engine substituted for an Engine from time to time thereafter in accordance with the terms of the Engine Mortgage, but excluding any Engine that has been released from the Lien of the Engine Mortgage in accordance with the terms thereof.
“Engine Collateral” means all of the Engines and such other items as are included within the definition of “Collateral” in the Engine Mortgage.
“Engine Container” means any engine container identified by manufacturer’s serial number on Schedule 2 to this Agreement.
“Engine Documents” has the meaning specified in the Engine Mortgage.
“Engine Mortgage” means the Engine Mortgage and Security Agreement in substantially the form of Exhibit A to this Agreement entered into by the Borrower and the Administrative Agent to secure the Loans, as supplemented by Mortgage Supplement No. 1 thereto pursuant to which all of the Engines and Engine Containers described on Schedule 2 to this Agreement are subjected to the Lien thereof.
“Engine Report” has the meaning specified in Section 4.1(g)(i).
“Engine Valuation Notice” has the meaning specified in Section 4.1(g)(ii).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the relations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA as in effect at the date of this Agreement and any subsequent provisions of ERISA amendatory thereof, supplemental thereto or substituted therefor.
“Event of Default” is defined in Section 7.1.
“Excluded Tax” of a Person means (A) any Tax imposed on all or part of the income, profits or gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction) of that Person, any franchise, doing business, net worth or capital-based Tax imposed on that Person, and any intangibles Tax or similar Tax imposed on the principal amount or value of the Loans, by any jurisdiction (including the United States) (i) in which that Person is organized, (ii) in which that Person’s principal office or applicable Lending Office is located, or (iii) in which that Person is subject to such Tax as a result of that Person doing business unrelated to making a Loan under this Agreement, (B) any Tax imposed on a transferee of a Lender or on payments to a transferee to the extent that, under applicable law in effect on the date of the transfer to such transferee, the amount of such Taxes exceeds the amount of such Taxes that would have been imposed on the transferor to such transferee or on payments to such transferor and indemnified against hereunder
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(with appropriate adjustment to reflect the amount of the Loan acquired by such transferee) or (C) any Tax to the extent that liability for such Tax is caused by, and would not have been incurred but for, (i) the gross negligence or willful misconduct of such Person or (ii) the inaccuracy of any representation of such Person in any Transaction Document or (iii) the breach by such Person of any of its obligations under Section 5.3(c)(i).
“Existing Early Termination Agreement” means that certain Omnibus Amendment Agreement dated as of January 7, 2005 among Borrower, Guarantor, Export Development Canada and certain other parties thereto with respect to ten CRJ-200 aircraft bearing manufacturer’s serial numbers 7594, 7599, 7601, 7720, 7723, 7737, 7739, 7740, 7759, and 7768.
“FAA” means the Federal Aviation Administration of the United States Department of Transportation, or any agency which may succeed to the rights, duties and obligations thereof under applicable law.
“FAA Counsel” means Daugherty, Fowler, Peregrin & Xxxxxx.
“FAA Filed Documents” means the Engine Mortgage (together with the Mortgage Supplement No. 1 thereto), the Spare Parts Mortgage, the Subordinated Engine Mortgage (together with the Mortgage Supplement No. 1 thereto), and the Subordinated Spare Parts Mortgage.
“Federal Aviation Act” means Title 49 of the United States Code which, among other things, recodified and replaced the U.S. Federal Aviation Act of 1958 and the regulations promulgated thereunder, or any subsequent legislation that amends, supplements or supersedes such provisions.
“Financing Statements” means, collectively, the Uniform Commercial Code financing statements naming Borrower as debtor and the Administrative Agent, as secured party, covering the Collateral to be filed with the appropriate Governmental Authorities on the Funding Date.
“Funding Date” means the date, on or prior to the Commitment Termination Date, which the Borrower requests for the funding of the Loans pursuant to Section 1.2
“GAAP” means generally accepted accounting principles as set forth in the statements of financial accounting standards issued by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants, as such principles may at any time or from time to time be varied by any applicable financial accounting rules or regulations issued by the SEC and, with respect to any Person, means such principles applied on a basis consistent with prior periods except as may be disclosed in such Person’s financial statements.
“GECAS” means GE Capital Aviation Services, Inc.
“GECC” means General Electric Capital Corporation.
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“GE Affiliate” means GECC and each Affiliate of GECC.
“GE Deferral Amount” means, as of any date of determination, (i) with respect to any particular GE Deferral Lease, the amount shown on Schedule 6 hereto with respect to such lease for the month in which the date of determination occurs, plus all accrued but unpaid “basic rent” (howsoever titled or described) under such lease through and including the date of determination, and (ii) with respect to all of the GE Deferral Leases, the aggregate sum of the amounts shown on Schedule 6 hereto with respect to each of the GE Deferral Leases for the month in which the date of determination occurs, plus all accrued but unpaid “basic rent” (howsoever titled or described) under all such leases through and including the date of determination.
“GE Deferral Leases” means, collectively, all of the leases described on Schedule 5 hereto, as the same may be further amended, supplemented, restated or otherwise modified from time to time, but only for so long as the owner participant thereunder remains a GE Affiliate.
“GE Deferral Lease Obligations” means, collectively, all obligations of the Borrower under the GE Deferral Leases and the “operative documents” (howsoever titled or described) relating to each such GE Deferral Lease, including, without limitation, the obligation to make payments of “basic rent” (howsoever titled or described) in full as and when due pursuant to the terms thereof, the obligation to make default interest payments, make-whole payments and/or payments for breakages costs (in each case howsoever titled or described) in respect of any payments not made when due, and all other payment and performance obligations of the Borrower thereunder, regardless of whether any such payment or performance obligation of the Borrower is expressed thereunder as being owed by the Borrower to a GE Affiliate or to some other party (it being expressly acknowledged and agreed that, pursuant to the express terms of the GE Deferral Leases and the “operative documents” relating thereto, certain payments are to be made by the Borrower to a security trustee or equivalent person or agent for the account of all interested parties, including the equity or owner participant therein as well as the lender or loan participants therein).
“Governmental Authority” means any (a) governmental entity, board, bureau, agency or instrumentality, (b) administrative or regulatory authority (including any central bank or similar authority) or (c) court, judicial authority or arbitrator, in each case, whether foreign or domestic.
“Guarantor” means FLYi, Inc., a Delaware corporation.
“Guaranty” means a Guaranty substantially in the form of Exhibit C hereto, duly completed and executed by Guarantor for the benefit of, among others, the Administrative Agent and the Lenders.
“Identified Spare Parts” has the meaning specified in the Spare Parts Mortgage.
“Independent Appraiser” has the meaning specified in the Spare Parts Mortgage.
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“Independent Appraiser’s Fee Amount” has the meaning set forth in Schedule 3.
“Interest Payment Date” means, subject to Section 1.6(b), the date numerically corresponding to the Funding Date in each calendar month, commencing with the month immediately following the month in which the Funding Date occurs and continuing until the Maturity Date or, in the absence of such a numerically corresponding date, the last day of such month. The final “Interest Payment Date” for any Note shall be the Maturity Date.
“Interest Period” means, with respect to any Note, a period used for calculating the interest rate applicable to such Note, as determined pursuant to Section 2.2.
“Interest Rate Determination Date” means, with respect to any Interest Period for a Note, the second Business Day prior to the first day of such Interest Period.
“LDTV Compliance Report” means an Officer’s Certificate substantially in the form of Exhibit L to this Agreement, duly completed and signed on behalf of the Borrower.
“LDTV Ratio” means, as of any date, a percentage determined by dividing (i) the aggregate outstanding principal amount of the Loans plus the GE Deferral Amount minus the amount of the Cash Collateral held by the Administrative Agent as of such date by (ii) the sum of (a) the aggregate Current Market Value of all Engines, (b) aggregate Current Market Value of all Pledged Spare Parts, excluding (x) those Pledged Spare Parts which are either in transit or out for repair and consequently not located at a Designated Location as of such date, and (y) those Pledged Spare Parts which are located at any Designated Location which is at the premises of a third party maintenance facility.
“Lender” is defined in the first paragraph of this Agreement.
“Lending Office” means the lending office of each Lender set forth on the signature page of this Agreement with respect to such Lender, or such other lending office as a Lender from time to time shall notify the Borrower as its lending office hereunder; provided that a Lender shall not, without the Borrower’s request, change its Lending Office if it would increase the Borrower’s obligations under Sections 5.1, 5.2 or 5.3.
“LIBOR Breakage Costs” has the meaning specified in Section 1.8.
“LIBOR Rate” means, with respect to any Interest Period, the rate appearing on Bloomberg Page BBAM 1 screen service (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service) at approximately 11:00 a.m., London time, on the Interest Rate Determination Date for such Interest Period, as the rate for dollar deposits with a maturity of three months. In the event that such rate is not available at such time for any reason, then the “LIBOR Rate” for such Interest Period shall be the average (rounded upwards to the nearest 1/100%), as determined by the Administrative Agent, of the per annum interest rates at which dollar
1-7
deposits of amounts comparable to the outstanding principal amount of the Loan and for a maturity of three months are offered by the principal London offices of the Reference Banks, in each case offered to prime banks in the London interbank market, in each case at or about 11:00 a.m., London time, on the Interest Rate Determination Date for such Interest Period.
“Lien” means any mortgage, pledge, lien, charge, claim, encumbrance, lease, sublease, sub-sublease or security interest affecting the title to or any interest in property.
“Lien of Record” means, (i) with respect to any Pledged Spare Parts, any Lien that is recorded in the records of the aircraft registry maintained by the FAA in Oklahoma City, Oklahoma in accordance with the Act (or any successor thereto under applicable law) against property located at the Designated Locations and having a description which would include any of such Pledged Spare Parts, and (ii) with respect to any Engine, any Lien that is recorded in the records of the aircraft registry maintained by the FAA in Oklahoma City, Oklahoma in accordance with the Act (or any successor thereto under applicable law) against such Engine.
“Loan” or “Loans” means the Series A Loan and/or the Series B Loan, individually or collectively as the context may require.
“Material Adverse Effect” means a material adverse effect on (i) the business or financial condition of the Borrower individually or the Guarantor and its Subsidiaries (including Borrower) taken as a whole, (ii) the ability of the Borrower and the Guarantor to pay any of the Loans or any of the other Obligations in accordance with the terms of this Agreement and the other Transaction Documents, (iii) the Collateral, the material impairment of the ability of the Borrower to perform, or the Administrative Agent or the Lenders to enforce, the obligations of Borrower under the Transaction Documents.
“Maturity Date” means the fifth (5th) anniversary of the Funding Date.
“Maximum Collateral Ratio” has the meaning set forth on Schedule 3 to this Agreement.
“Maximum Deductible Amount” has the meaning set forth on Schedule 3 to this Agreement.
“Maximum Deferral Amount” means, as of any date of determination, the amount shown on Schedule 7 attached hereto for the month in which the date of determination occurs, plus all accrued but unpaid “basic rent” (howsoever titled or described) under all of the GE Deferral Leases in the aggregate through and including the date of determination. Notwithstanding the foregoing, the parties hereto acknowledge and agree that (i) the amount shown on Schedule 7 attached hereto for each month shown on such schedule reflects the “maximum” amount of the GE Deferral Amount with respect to all of the GE Deferral Leases in the aggregate as reflected on Schedule 6 hereto, assuming due and punctual payment by the Borrower of all ‘basic rent” (howsoever titled or described) when due under the GE Deferral Leases, during the period from and including the first day of such month through and including the Maturity Date, and (ii) in the event
1-8
any of the leases described on Schedule 5 attached hereto ceases to be a GE Deferral Lease because the owner participant thereunder is no longer a GE Affiliate, then this Agreement shall be amended to incorporate a new version of Schedule 7, recalculated to reflect the deletion of such lease from the pool of GE Deferral Leases on the same basis and using the same methodology as originally used to calculate Schedule 7 as in effect on the date hereof.
“Maximum LDTV Ratio” has the meaning set forth on Schedule 3 to this Agreement.
“Maximum Rotables Ratio” has the meaning set forth on Schedule 3 to this Agreement.
“Moody’s” means Xxxxx’x Investors Service, Inc.
“Mortgages” means, collectively, the Senior Mortgages and the Subordinated Mortgages.
“Note” means a Series A or Series B promissory note of the Borrower issued in connection with a Loan made by a Lender and payable to the order of such Lender, in substantially the form of Exhibit D hereto, evidencing the indebtedness of the Borrower to such Lender resulting from such Loan.
“Notice of Borrowing” means a notice substantially in the form of Exhibit E annexed hereto delivered by the Borrower to the Administrative Agent pursuant to Section 1.2(b) with respect to a proposed borrowing.
“Obligations” means, collectively, the principal of and interest on the Loans, any LIBOR Breakage Costs, and all other obligations of every nature of the Borrower from time to time owed to the Administrative Agent, the Lenders (or any of them) under this Agreement or any other Transaction Document.
“Officer’s Certificate” means, as to any Person, a certificate signed by the Chairman, any Vice Chairman, the President, the Chief Executive Officer, the Chief Financial Officer, any Executive Vice President or any Senior Vice President of such Person.
“Other Taxes” means any and all present or future Taxes arising from any payment made under any Transaction Document or from the execution, delivery, performance, filing, recording or enforcement of, or otherwise with respect to, any Transaction Document or the transactions contemplated by the Transaction Documents, excluding any Taxes based on or measured by net income or net profits.
“Participant” is defined in Section 9.8(b).
“Payment and Indemnity Agreement” means the Payment and Indemnity Agreement substantially in the form of Exhibit H hereto among the Borrower, the Collateral Agent and the Beneficiaries.
1-9
“Payment Date” means, subject to Section 1.8(b), with respect to the Series A and Series B Notes, the date numerically corresponding to the Funding Date in each calendar month following the month in which the Funding Date occurs and continuing through the Maturity Date, or, in the absence of such a numerically corresponding date, the last day of such month. The final “Payment Date” for any Note shall be the Maturity Date for such Note.
“Percentage Share” means, for each Lender, any of the following, as the context may require: (i) with respect to the Series A Loan, such Lender’s Series A Commitment divided by the Aggregate Series A Commitment, (ii) with respect to the Series B Loan, such Lender’s Series B Commitment divided by such the Aggregate Series B Commitment, and (iii) with respect to the Loans collectively, the sum of such Lender’s Series A Commitment and such Lender’s Series B Commitment, divided by the sum of the Aggregate Commitment.
“Permitted Disposition” is defined in the Engine Mortgage.
“Permitted Investments” is defined in each Senior Mortgage.
“Permitted Liens” is defined in the Engine Mortgage with respect to the Collateral covered thereby and in the Spare Parts Mortgage with respect to the Collateral covered thereby.
“Persons” or “persons” means individuals, firms, partnerships, joint ventures, trusts, trustees, Governmental Authorities, organizations, associations, corporations, limited liability companies, or any committees, departments, authorities and other bodies thereof, corporate or incorporate, whether having distinct legal status or not, or any member of any of the same.
“Physical Appraisal Methodology” has the meaning set forth in the Spare Parts Mortgage.
“Pledged Spare Parts” has the meaning set forth in Clause (a) of the first paragraph of Section 2.01 of the Spare Parts Mortgage.
“Potential Default” means any event or condition that with the lapse of time or giving of notice, or both, would constitute an Event of Default.
“Prepayment Date” means, with respect to any prepayment of any Loan pursuant to Section 1.1(c) or (d), as the case may be, the date on which the Administrative Agent receives the funds from the Borrower required to effect the prepayment contemplated thereby.
“Qualified Affiliate” means, as to any Lender, an Affiliate of such Lender engaged in the business of making loans.
“Ratable Share” means, for each Lender, any of the following, as the context may require: (i) with respect to the Series A Loan, the outstanding principal balance of such
1-10
Lender’s Series A Note divided by the aggregate outstanding principal balance of all Series A Notes, (ii) with respect to the Series B Loan, the outstanding principal balance of such Lender’s Series B Note divided by the aggregate outstanding principal balance of all Series B Notes, and (iii) with respect to the Loans collectively, the outstanding principal balance of all Notes held by such Lender divided by the aggregate outstanding principal balance of all Notes.
“Reference Banks” means (a) Deutsche Bank, (b) Citibank, N.A., (c) JPMorgan Chase Bank, and (d) such other bank or banks as may from time to time be agreed by the Borrower and the Required Lenders.
“Register” is defined in Section 9.8(d).
“Releases” means, collectively, all such releases, lease termination certificates and other documents and instruments, howsoever titled or described, as may be required to be filed with the FAA, each duly executed by or on behalf the lessor or secured party named therein, in order to terminate any and all liens of record covering all or any portion of the Collateral (other than liens in favor of the Administrative Agent and the Collateral Agent created by the Transaction Documents and the Subordinated Documents).
“Repairables” has the meaning set forth in the Spare Parts Mortgage.
“Required Lenders” means Lenders having (i) Commitments in excess of 50% of the Aggregate Commitment or (ii) if the Commitments have been terminated, Notes with an outstanding principal balance in excess of 50% of the aggregate outstanding balance of all Notes outstanding (regardless of Series).
“Restructuring Transactions” means the transactions contemplated by that certain Memorandum of Understanding dated January 7, 2005 among GECAS, Borrower and Guarantor, other than the transactions contemplated by paragraph 4 and Exhibit A thereof (it being expressly understood that those provisions of the Memorandum of Understanding refer to the transactions contemplated by this Agreement and the other Transaction Documents and Subordinated Documents).
“Rotables” has the meaning set forth in the Spare Parts Mortgage.
“Rotables Ratio” has the meaning set forth in the Spare Parts Mortgage.
“SEC” means the Securities and Exchange Commission of the United States, or any Governmental Authority succeeding to the functions of such Securities and Exchange Commission.
“Senior Mortgages” means, collectively, the Engine Mortgage and the Spare Parts Mortgage.
“Series” means, as the context may require, any of (i) the Series A Notes, collectively, or (ii) the Series B Notes, collectively.
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“Series A Commitment” means, with respect to any Lender, its commitment to make such portion of the Series A Loan as is set forth on its signature page hereto.
“Series A Note” means a promissory note substantially in the form of Exhibit D hereto designated on its face as a “Series A Note”, duly completed and executed by Borrower.
“Series B Commitment” means, with respect to any Lender, its commitment to make such portion of the Series B Loan as is set forth on its signature page hereto.
“Series B Note” means a promissory note substantially in the form of Exhibit D hereto designated on its face as a “Series B Note”, duly completed and executed by Borrower.
“Software” has the meaning set forth in the Spare Parts Mortgage.
“Spare Parts” has the meaning specified in the Spare Parts Mortgage.
“Spare Parts Collateral” means all of the Pledged Spare Parts and such other items as are included within the definition of “Collateral” in the Spare Parts Mortgage.
“Spare Parts Documents” has the meaning specified in the Spare Parts Mortgage.
“Spare Parts Mortgage” means the Spare Parts Mortgage and Security Agreement in substantially the form of Exhibit B to this Agreement entered into by the Borrower and the Administrative Agent to secure the Loans.
“Special Default” means any Event of Default pursuant to Section 7.1(a), (b) and/or (f) or any event or condition that with the lapse of time or giving of notice, or both, would constitute an Event of Default under Section 7.1(a), (b) and/or (f); provided, however, that with respect to any payment contemplated by Section 7.1(b) above that is due upon demand, rather than within some specified period following demand, no “Special Default” shall arise under this definition unless and until any failure to pay continues for five Business Days following the date of such demand.
“Subordinated Documents” means, collectively, the Payment and Indemnity Agreement, the Collateral Agent Agreement, the Subordinated Engine Mortgage and the Subordinated Spare Parts Mortgage
“Subordinated Engine Mortgage” means the Subordinated Engine Mortgage and Security Agreement in substantially the form of Exhibit I to this Agreement entered into by the Borrower and the Administrative Agent to secure the obligations of the Borrower under the Payment and Indemnity Agreement, as supplemented by Mortgage Supplement No. 1 thereto pursuant to which all of the Engines described on Schedule II to this Agreement are subjected to the Lien thereof.
“Subordinated Mortgages” means, collectively, the Subordinated Engine Mortgage and the Subordinated Spare Parts Mortgage.
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“Subordinated Spare Parts Mortgage” means the Subordinated Spare Parts Mortgage and Security Agreement in substantially the form of Exhibit J to this Agreement entered into by the Borrower and the Administrative Agent to secure the obligations of the Borrower under the Payment and Indemnity Agreement.
“Subsidiary” means, as to any Person, any other Person of which at least a majority of the voting stock (or equivalent equity interests) is owned or controlled by such first Person or by one or more other Subsidiaries.
“Taxes” means all taxes, charges, fees, levies or other assessments (including income, gross receipts, profits, withholding, excise, property, sales, use, license, occupation and franchise taxes and including any related interest, penalties or other additions) imposed by any jurisdiction or taxing authority (whether international, foreign or domestic).
“Threshold Amount” has the meaning specified in Schedule 3 to this Agreement.
“Transaction Documents” means this Agreement, the Notes, the Engine Mortgage, the Spare Parts Mortgage, and the Guaranty.
“Transfer Supplement” is defined in Section 9.8(c).
“Trigger Event” has the meaning specified in that certain Milestone Agreement to be dated on or about February 18, 2005 among Borrower, Guarantor and the beneficiaries named therein.
“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in effect in any applicable jurisdiction.
“UCC Termination Statements” means, collectively, all such UCC-3 termination statements as may be required to be filed with the appropriate Governmental Authority, each duly authorized by or on behalf the secured party named therein, in order to terminate any and all UCC financing statements of record covering all or any portion of the Collateral (other than financing statements in favor of the Administrative Agent and the Collateral Agent, respectively, contemplated by the Transaction Documents and the Subordinated Documents).
2. Other Interpretive Provisions. (a) The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. All terms defined directly or by incorporation in this Agreement shall have the defined meanings when used in any certificate or other document delivered pursuant hereto unless otherwise defined therein. For purposes of this Agreement and all such certificates and other documents, unless the context otherwise requires: (i) accounting terms not otherwise defined in this Agreement, and accounting terms partly defined in this Agreement to the extent not defined, shall have the respective meanings given to them under GAAP; (ii) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day; (iii) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement (or the certificate or other document in which they are used) as a whole and not to any particular
1-13
provision of this Agreement (or such certificate or document); (iv) references to any Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to this Agreement (or the certificate or other document in which the reference is made), and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (v) the term “including” means “including without limitation”; (vi) references to any law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation; (vii) references to any agreement refer to that agreement as from time to time amended, supplemented, restated or as the terms of such agreement are waived or modified in accordance with its terms; (viii) references to any Person include that Person’s successors and assigns; and (ix) headings are for convenience of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.
(b) Each exhibit and schedule to this Agreement is incorporated in, and shall be deemed a part of, this Agreement.
(c) All terms defined in any Senior Mortgage and used herein have such respective defined meanings unless otherwise defined herein.
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ENGINE AND ENGINE CONTAINER DESCRIPTIONS
AND TERMINATION VALUES
|
Engine Type |
|
Engine S/N |
|
Termination Value |
|
|
|
CF34-3B1 |
|
GE-E-950191 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-872483 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-873416 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-950192 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-873044 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-950205 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-873689 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-872207 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-873155 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-950229 |
|
$ |
[***] |
|
|
CF34-3B1 |
|
GE-E-872232 |
|
$ |
[***] |
|
“Engine Containers” means the eleven (11) engine containers bearing manufacturer’s serial numbers 9661, 073, 076, 9684, 054, 039, 9688, 9715, 051, 02571 and 9675.
2-1
CERTAIN INFORMATION
1. Certain Definitions:
“Aggregate Series A Commitment” means $8,516,374.
“Aggregate Series B Commitment” means $7,655,023.
“Independent Appraiser’s Fee Amount” means $130,000, subject to increase from time to time in the event that the fees charged by the Independent Appraiser are increased due to (i) changes in the overall number of Designated Locations, (ii) changes in the relative percentage (determined on the basis of Current Market Value) of Pledged Spare Parts stored at each Designated Location, (iii) changes in the locations of Designated Locations, and/or (iv) any other material changes in the Borrower’s operations or spares inventory or spares inventory management systems that increase the cost to the Independent Appraiser of performing its duties under the Spare Parts Mortgage.
“Maximum Collateral Ratio” means twenty-eight percent ([***]%).
“Maximum Deductible Amount” as used in (i) the Spare Parts Mortgage means the standard market spares deductible in existence from time to time in the worldwide airline insurance marketplace, but in no event greater than $100,000, any one occurrence, and (ii) the Engine Mortgage, $250,000.
“Maximum LDTV Ratio” means seventy percent ([***]%).
“Maximum Rotables Ratio” means thirty-three percent ([***]%).
“Minimum Liability Amount” means $[***].
“Threshold Amount” means $[***].
2. Additional Agreement Concerning Insurance: The Administrative Agent and the Borrower hereby expressly agree that, if General Electric Capital Corporation or any of its Affiliates are at any time permitting, as a discretionary matter, lower amounts or lesser scope of War Risk Insurance than the amounts and scope of such insurance required under paragraph B.1 of Appendix B to the Engine Mortgage for carriers similarly situated to the Borrower, the Borrower shall receive comparable treatment from the Administrative Agent in its capacity as Secured Party under the Engine Mortgage
3-1
SCHEDULE 3.1(e)
CERTAIN LEGAL PROCEEDINGS
With respect to one CRJ leveraged lease in which Independence Air, Inc. is lessor and FLYi, Inc. is a guarantor, a lender under the leveraged lease did not agree to defer lease payments pending restructuring negotiations, and has terminated the lease and repossessed the aircraft. An action is also pending the Supreme Court of the State of New York, County of New York, titled U.S. Bank National Association, as Loan trustee on behalf of ING Lease (Ireland) B.V. and ING Lease (Ireland) B.V. v. Independence Air, Inc. In that action the plaintiff is seeking damages for all unpaid rent due under the applicable lease before, during and after the exercise of remedies, and for legal fees and other costs. Independence Air does not anticipate that this case will be settled as part of its restructuring and the claim will need to be litigated. Unless Independence Air, Inc. is able to negotiate a suitable resolution of this matter, it will have an ongoing exposure for amounts due under the lease relative to the amount earned by the lease parties after they have mitigated their damages.
Seven J41 leases in which Independence Air, Inc. is lessor and FLYi, Inc. is a guarantor are with an affiliate of BAE Systems, Inc. The leases include a provision that requires Independence Air, Inc. to pay maintenance reserves should it terminate its engine power by the hour arrangement. That arrangement was terminated when the J41 operations ceased. The leases provide that Independence Air, Inc. catch up on reserve payments by making 12 equal monthly installments. The lessor provided a notice of default in December 2004 claiming reserves in excess of $[***]. Independence Air, Inc. has subsequently not made monthly lease payments. The lessor waived defaults through January 31, 2005, but has not agreed to a further extension. The lease also provides that the loss of Independence Air, Inc.’s code share agreement with United is a violation of the lease. As a result of the termination of Independence Air, Inc.’s agreement with United, this provision could be raised by the lessor as a further effort to accelerate the leases. Independence Air, Inc. is in negotiations with the lessor for the return of the aircraft, the termination of the applicable leases, and the settlement of outstanding defaults, and presently anticipates that it will successfully complete these negotiations as part of its restructuring.
With respect to four J41 leases in which Independence Air, Inc. is lessor and FLYi, Inc. is a guarantor, the lessor provided a notice in December that it viewed Independence Air, Inc.’s statement during the course of negotiations that it would not be making further lease payments as an anticipatory breach. The lessor declared the leases to be in default and provided a notice of termination. Independence Air, Inc. has subsequently entered into an MOU with this party for the return of the aircraft, the termination of the applicable leases, and the settlement of outstanding defaults, and is in the process of having the aircraft inspected for return and completing final agreements. The Company presently anticipates that it will successfully complete these final agreements as part of its restructuring.
3.1(e)-1
With respect to two J41 leases in which Independence Air, Inc. is lessor and FLYi, Inc. is a guarantor, the lessor provided a notice of termination after its lease payments were not made in January 2005. Independence Air, Inc. is in the process of negotiations with this party, including with BAE with respect to certain residual value support provided to the lessor, and presently anticipates that it will successfully complete these negotiations as part of its restructuring.
There are nine other J41s for which lease payments have not been made, and one J41 for which loan payments have not been made. These parties provided a waiver of default through January 31. They have also agreed to provide a further waiver until February 22 provided BAE Systems, Inc. confirms that it will not consider this waiver to relinquish any rights of these parties under residual value agreements they have with BAE. BAE provided these confirmations through January 31 but has not renewed them. Independence Air, Inc. is in the process of negotiations with these parties, including with BAE with respect to certain residual value support provided to the lessors, and presently anticipates that it will successfully complete these negotiations as part of its restructuring.
With respect to 32 Dornier 328 leases in which Independence Air, Inc. is lessor and FLYi, Inc. is a guarantor, the lenders in the leveraged leases have agreed to defer certain lease payments through February 28, 2005. The Company is in the process of negotiating arrangements for the assignment of 30 of these aircraft to Delta Airlines pursuant to its rights under its former Delta Connection Agreement, and for the release by the lenders from claims against Independence Air, Inc. or FLYi, Inc. under the leases. The Company presently anticipates that it will successfully complete its negotiations with the lenders for all 32 of the 328s as part of its restructuring. The equity participant in these leveraged leases is Xxxxxxxxx Dornier GmbH, the manufacturer of the aircraft. That entity defaulted under certain obligations to Independence Air, Inc., and Independence Air, Inc. believes that it will ultimately not be liable to this party under the leases.
Independence Air, Inc. is in various stages of negotiations with its other CRJ lessors with respect to payment obligations that we due during 2005, and presently anticipates that it will successfully complete these negotiations as part of its restructuring.
Adverse decisions in any of the foregoing, or an inability to successfully restructure those matters intended to be addresses as part of the proposed restructuring of Independence Air, Inc. could result in defaults or accelerations of these and the Company’s other obligations.
3.1(e)-2
PRINCIPAL AMORTIZATION
|
Payment Date |
|
Principal PMT as |
|
|
Feb 18 2005 |
|
|
|
|
Mar 18 2005 |
|
[***] |
% |
|
Apr 18 2005 |
|
[***] |
% |
|
May 18 2005 |
|
[***] |
% |
|
Jun 18 2005 |
|
[***] |
% |
|
July 18 2005 |
|
[***] |
% |
|
Aug 18 2005 |
|
[***] |
% |
|
Sep 18 2005 |
|
[***] |
% |
|
Oct 18 2005 |
|
[***] |
% |
|
Nov 18 2005 |
|
[***] |
% |
|
Dec 18 2005 |
|
[***] |
% |
|
Jan 18 2006 |
|
[***] |
% |
|
Feb 18 2006 |
|
[***] |
% |
|
Mar 18 2006 |
|
[***] |
% |
|
Apr 18 2006 |
|
[***] |
% |
|
May 18 2006 |
|
[***] |
% |
|
Jun 18 2006 |
|
[***] |
% |
|
July 18 2006 |
|
[***] |
% |
|
Aug 18 2006 |
|
[***] |
% |
|
Sep 18 2006 |
|
[***] |
% |
|
Oct 18 2006 |
|
[***] |
% |
|
Nov 18 2006 |
|
[***] |
% |
|
Dec 18 2006 |
|
[***] |
% |
|
Jan 18 2007 |
|
[***] |
% |
|
Feb 18 2007 |
|
[***] |
% |
|
Mar 18 2007 |
|
[***] |
% |
|
Apr 18 2007 |
|
[***] |
% |
|
May 18 2007 |
|
[***] |
% |
|
Jun 18 2007 |
|
[***] |
% |
|
July 18 2007 |
|
[***] |
% |
|
Aug 18 2007 |
|
[***] |
% |
|
Sep 18 2007 |
|
[***] |
% |
|
Oct 18 2007 |
|
[***] |
% |
|
Nov 18 2007 |
|
[***] |
% |
|
Dec 18 2007 |
|
[***] |
% |
|
Jan 18 2008 |
|
[***] |
% |
4-1
|
Payment Date |
|
Principal PMT as |
|
|
Feb 18 2008 |
|
[***] |
% |
|
Mar 18 2008 |
|
[***] |
% |
|
Apr 18 2008 |
|
[***] |
% |
|
May 18 2008 |
|
[***] |
% |
|
Jun 18 2008 |
|
[***] |
% |
|
July 18 2008 |
|
[***] |
% |
|
Aug 18 2008 |
|
[***] |
% |
|
Sep 18 2008 |
|
[***] |
% |
|
Oct 18 2008 |
|
[***] |
% |
|
Nov 18 2008 |
|
[***] |
% |
|
Dec 18 2008 |
|
[***] |
% |
|
Jan 18 2009 |
|
[***] |
% |
|
Feb 18 2009 |
|
[***] |
% |
|
Mar 18 2009 |
|
[***] |
% |
|
Apr 18 2009 |
|
[***] |
% |
|
May 18 2009 |
|
[***] |
% |
|
Jun 18 2009 |
|
[***] |
% |
|
July 18 2009 |
|
[***] |
% |
|
Aug 18 2009 |
|
[***] |
% |
|
Sep 18 2009 |
|
[***] |
% |
|
Oct 18 2009 |
|
[***] |
% |
|
Nov 18 2009 |
|
[***] |
% |
|
Dec 18 2009 |
|
[***] |
% |
|
Jan 18 2010 |
|
[***] |
% |
|
Feb 18 2010 |
|
[***] |
% |
4-2
GE DEFERRAL LEASES
1. Lease Agreement [[***]] dated as of July 22, 1998 between Wachovia Bank, National Association, as successor by merger to First Union National Bank, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
2. Lease Agreement [***] dated as of July 31, 2001 between Wachovia Bank, National Association, as successor by merger to First Union National Bank, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
3. Lease Agreement [***] dated as of July 31, 2001 between Wachovia Bank, National Association, as successor by merger to First Union National Bank, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
4. Lease Agreement [***] dated as of July 31, 2001 between Wachovia Bank, National Association, as successor by merger to First Union National Bank, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
5. Lease Agreement [***] dated as of July 31, 2002 between Wachovia Bank, National Association, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
6. Lease Agreement [***] dated as of July 31, 2002 between Wachovia Bank, National Association, as owner trustee, and, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
7. Lease Agreement [***] dated as of September 12, 2002 between Wachovia Bank, National Association, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
8. Lease Agreement [***] dated as of September 13, 2002 between Wachovia Bank, National Association, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
9. Lease Agreement [***] dated as of October 18, 2002 between Wachovia Bank, National Association, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
10. Lease Agreement [***] dated as of October 23, 2002 between Wachovia Bank, National Association, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
5-1
11. Lease Agreement [***] dated as of November 13, 2002 between Wachovia Bank, National Association, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
12. Lease Agreement [***] dated as of November 26, 2002 between Wachovia Bank, National Association, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
13. Lease Agreement [***] dated as of December 4, 2002 between Wachovia Bank, National Association, as owner trustee, as lessor, and Independence Air, Inc., formerly known as Atlantic Coast Airlines, as lessee.
5-2
Form of Promissory Note
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES OR SIMILAR LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION UNDER THE ACT AND SUCH SECURITIES OR SIMILAR LAWS IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION.
THIS NOTE IS SUBJECT TO CERTAIN ADDITIONAL RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 9.8 OF THE LOAN AGREEMENT REFERRED TO BELOW.
SERIES [*] NOTE DUE FEBRUARY [ ], [2010
|
No. [*] - |
New York, New York |
, 200[ ]
$
FOR VALUE RECEIVED, the undersigned, INDEPENDENCE AIR, INC., a California corporation (together with its successors and permitted assigns, the “Borrower”) hereby unconditionally promises to pay to , or the registered assignee thereof, the principal amount of DOLLARS ($ ), in lawful currency of the United States of America, in installments in the amounts and on the Payment Dates set forth in Annex A hereto, and to pay interest in arrears on each Interest Payment Date at the Debt Rate (as defined herein below) for the Interest Period ending on such Interest Payment Date on the amount of such principal amount remaining unpaid from time to time from the date hereof until such principal amount is paid in full; provided that in the event (i) that this Note shall have been prepaid in part pursuant to the Loan Agreement, from and after the relevant Prepayment Date, the amounts of such installments shall be reduced, in inverse order of maturity, by the amount of such partial prepayment and (ii) of any repayment or prepayment of any principal amount hereof, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment; and provided further that the final principal payment hereon shall in any and all events equal the then outstanding principal balance hereof and such final payment shall discharge all amounts due under this Note. Interest shall be computed on the basis of a year of 360 days and the actual days elapsed (including the first day but excluding the last day) in the period for which interest is payable. The Applicable Margin for this Note is [***]% per annum. As used herein, the term “Debt Rate” means the LIBOR Rate for the relevant Interest Period plus the Applicable Margin.
Notwithstanding the foregoing, this Note shall bear interest at the Default Rate on overdue principal and, to the extent permitted by applicable law, on any interest and any other amounts payable hereunder not paid when due and payable for any period during which the same shall be overdue, payable on demand by the holder hereof.
D-1
This Note is one of the Notes referred to in, and is entitled to the benefits of, the Loan Agreement dated as of February 17, 2005, among the Borrower, General Electric Capital Corporation, as Administrative Agent, General Electric Capital Corporation, as Lender, and the Lenders from time to time party thereto (as the same may be amended, modified, supplemented and/or restated from time to time, the “Loan Agreement”; the terms defined therein being used herein as therein defined). The Loan Agreement, among other things, (i) provides for the making of one or more loans to the Borrower to be evidenced by one or more Notes, as originally issued and as the same may be replaced pursuant to the terms thereof, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. The obligations of the Borrower under this Note and the Loan Agreement are secured by collateral as provided in the Engine Mortgage and the Security Agreement and the Spare Parts Mortgage and Security Agreement, each dated as of February 18, 2005, executed by the Borrower and General Electric Capital Corporation, as secured party (as each may be amended and supplemented from time to time, collectively, the “Mortgages”).
Each holder hereof, by its acceptance of this Note, agrees that each payment received by it hereunder shall be applied, first, to the payment of any amount (other than principal of or interest on this Note) then due in respect of this Note, including, without limitation, LIBOR Breakage Costs, if any; second, to the payment of accrued interest on this Note (as well as any interest on overdue principal, or, to the extent permitted by law, on LIBOR Breakage Costs, if any, on interest and on other amounts due hereunder) due and payable to the date of such payment; and third, to the payment of principal then due hereunder (applied, in the case of a partial prepayment, in inverse order of maturity).
There shall be maintained a Note Register for the purpose of registering transfers and exchanges of Notes at the office of the Administrative agent in the manner provided in Section 9.8(d) of the Loan Agreement. As provided in the Loan Agreement and subject to certain limitations therein set forth, the Notes may be assigned, and the Notes are exchangeable for a like aggregate original principal amount of Notes of different authorized denominations, as requested by the Lender surrendering the same.
Unless the certificate of authentication hereon has been executed by or on behalf of the Administrative Agent by manual signature, this Note shall not be entitled to any benefit under the Loan Agreement or the Mortgages or be valid or obligatory for any purpose.
D-2
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
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INDEPENDENCE AIR, INC. |
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By: |
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Name: |
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Title: |
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D-3
ADMINISTRATIVE AGENT’S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Loan Agreement and Mortgages.
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GENERAL ELECTRIC CAPITAL |
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not in its individual capacity but |
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By: |
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Name: |
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Title: |
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D-4
FORM OF NOTICE OF BORROWING
NOTICE OF BORROWING
General Electric Capital Corporation
as Administrative Agent
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Attention: [ ] |
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, 2005 |
Ladies and Gentlemen:
We refer to the Loan Agreement dated as of February 17, 2005, among Independence Air, Inc., General Electric Capital Corporation, as Administrative Agent, General Electric Capital Corporation, as Lender, and the Lenders from time to time party thereto (as amended or modified from time to time, the “Loan Agreement”; the terms defined therein being used herein as therein defined). We hereby give you notice requesting the Series A Loan and the Series B Loan pursuant to Section 1.2(b) of the Loan Agreement, and in that connection we set forth below the required information relating to such Loans (collectively, the “Proposed Loans”):
(1) The Funding Date on which the Proposed Loans shall be made is .
(2) The aggregate principal amount of the Proposed Loans is $ .
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Very truly yours, |
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INDEPENDENCE AIR, INC. |
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By: |
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Name: |
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Title: |
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E-1
FORM OF TRANSFER SUPPLEMENT
Date ,
Reference is made to the Agreement described in Item 2 of Annex I hereto (as such Loan Agreement may hereafter be amended, supplemented or otherwise modified from time to time, the “Loan Agreement”). Unless defined in Annex I hereto, terms defined in the Loan Agreement are used herein as therein defined. (the “Assignor”) and (the “Assignee”) hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without recourse and without representation or warranty (other than as expressly provided herein), and the Assignee hereby purchases and assumes from the Assignor, that interest in and to all of the Assignor’s rights and obligations under the Loan Agreement as of the date hereof which represents the percentage interest specified in Item 4 of Annex I hereto (the “Assigned Share”) of all of the outstanding rights and obligations under the Loan Agreement relating to the Loans and Commitments listed in Item 4 of Annex I hereto. After giving effect to such sale and assignment, the amount of the outstanding Loans owing to the Assignee will be as set forth in Item 4 of Annex I hereto.
2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement or the other Transaction Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement or the other Transaction Documents or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any party to the Transaction Documents or the performance or observance by any party to the Transaction Documents of any of their respective obligations under the Loan Agreement or the other Transaction Documents to which they are a party or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Loan Agreement and the other Transaction Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Transfer Supplement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement; (iii) confirms that it is an Eligible Assignee under Section 9.8(c) of the Loan Agreement; (iv) appoints and authorizes the Administrative Agent to take such action as an agent on its behalf and to exercise such powers under the Loan Agreement and the other Transaction Documents as are delegated to the Administrative Agent, as the case may be, by the
F-1
terms thereof, together with such powers as are reasonably incidental thereto; (vi) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Agreement are required to be performed by it as a Lender; (vii) makes the representations and warranties contained in Section 3.5 of the Loan Agreement[; and (viii) attaches the forms described in Sections 5.3(c) and 9.8(c) of the Loan Agreement.](1)
4. Following the execution of this Transfer Supplement by the Assignor and the Assignee, an executed original hereof (together with all attachments) will be delivered to the Administrative Agent. This Transfer Supplement shall be effective, unless a later date is otherwise specified in Item 5 of Annex I hereto (the “Settlement Date”), upon the date upon which each of the following conditions shall have been satisfied: (i) each of the Assignor and Assignee shall have executed a copy hereof and delivered the same to the other party, (ii) the registration of the transfer on the Register as provided by Section 9.8(d) of the Loan Agreement and (iii) receipt by the Assignee of such other documentation or fees specified on Item 9 of Annex I hereto.
5. Upon the delivery of a fully executed original hereof to the Administrative Agent, as of the Settlement Date of this Transfer Supplement, (i) the Assignee shall be a party to the Loan Agreement and, to the extent provided in this Transfer Supplement, have the rights and obligations of a Lender thereunder and under the other Transaction Documents and (ii) the Assignor shall, to the extent provided in this Transfer Supplement, relinquish its rights and be released from its obligations under the Loan Agreement and the other Transaction Documents.
6. It is agreed that the Assignee shall be entitled to all interest on the Assigned Share of the Loans at the rates specified in Item 6 of Annex I which are paid by the Borrower on and after the Settlement Date, such interest to be paid by the Administrative Agent directly to the Assignee. It is further agreed that all payments of principal made on the Assigned Share of the Loans which occur on and after the Settlement Date will be paid directly by the Administrative Agent to the Assignee. Upon the Settlement Date, the Assignee shall pay to the Assignor an amount specified by the Assignor in writing which represents the Assigned Share of the principal amount of the Loans pursuant to the Loan Agreement which are outstanding on the Settlement Date, and which are being assigned hereunder. The Assignor and the Assignee shall make all appropriate adjustments in payments under the Loan Agreement for periods prior to the Settlement Date directly between themselves.
7. The Borrower is an intended third party beneficiary of, and may enforce, this Transfer Supplement.
8. THIS TRANSFER SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(1) Include if the Assignee is organized under the laws of a jurisdiction outside of the United States.
F-2
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Transfer Supplement, as of the date first above written, such execution also being made on Annex I hereto.
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[NAME OF ASSIGNOR], |
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as Assignor |
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[NAME OF ASSIGNEE], |
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as Assignee |
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Acknowledged and Agreed: |
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GENERAL ELECTRIC CAPITAL CORPORATION |
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F-3
ANNEX FOR TRANSFER SUPPLEMENT
ANNEX I
1. Borrower: Independence Air, Inc.
2. Name and Date of Loan Agreement:
Loan Agreement, dated as of February 17, 2005, among Independence Air, Inc., as Borrower, General Electric Capital Corporation, as Administrative Agent and Lender, and the Lenders from time to time party thereto.
3. Date of Assignment Agreement:
4. Amounts (as of date of Item 3 above):
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Outstanding Principal |
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Aggregate |
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a. Aggregate Amount for all Lenders |
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$ |
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$ |
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b. Assigned Share |
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c. Amount of Assigned Share |
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$ |
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$ |
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5. Settlement Date: |
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6. Rate of Interest to the Assignee: |
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As set forth in Section 2.1 of the Loan Agreement (unless otherwise agreed to by the Assignor and the Assignee)* |
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* The Borrower and the Administrative Agent shall direct the entire amount of the interest to the Assignee at the rate set forth in Section 2.1 of the Loan Agreement, with the Assignor and Assignee effecting the agreed upon sharing of the interest through payments by the Assignee to the Assignor.
F-4
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7. Notice and Lending Office: |
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ASSIGNOR: |
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Attention: |
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Telephone: |
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Telecopier: |
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ASSIGNEE: |
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Attention: |
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Telephone: |
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8. Payment Instructions: |
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ASSIGNOR: |
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Attention: |
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Reference: |
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ASSIGNEE: |
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Attention: |
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Reference: |
F-5
9. Other Documents or Fees for Closing (if any):
Acknowledged and Agreed:
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[NAME OF ASSIGNEE] |
[NAME OF ASSIGNOR] |
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(Print Name and Title) |
(Print Name and Title) |
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F-6
FORM OF CERTIFICATE RE NON-BANK STATUS
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to the Loan Agreement , dated as of February 17, 2005, among Independence Air, Inc., General Electric Capital Corporation, as Administrative Agent and Lender and the other Lenders party thereto from time to time (as amended or modified from time to time, the “Loan Agreement”). Pursuant to the provisions of Section 5.3(c) of the Loan Agreement, the undersigned hereby certifies that it is not a “bank” as such term is used in Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended.
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[NAME OF LENDING INSTITUTION] |
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By |
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Title: |
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Date: |
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G-1
Form of LDTV Compliance Report
LDTV COMPLIANCE REPORT
[Address to each Lender and
to the Administrative Agent]
LDTV Compliance Report Under the Loan Agreement
Ladies and Gentlemen:
We refer to the Loan Agreement (the “Loan Agreement”), dated as of , between Independence Air, Inc. (the “Company”), General Electric Capital Corporation, as Administrative Agent and Lender, and the other Lenders from time to time party thereto. Terms defined in the Loan Agreement and used herein have such respective defined meanings. The Company hereby certifies that:
1. This LDTV Compliance Report is based upon (i) an Engine Valuation Notice dated [ ] provided by the Administrative Agent to the Borrower (the “Relevant Engine Valuation Notice”), (ii) an Engine Report dated as of the date hereof duly executed by the Borrower and being delivered to the Administrative Agent concurrently with this report reflecting the status of the Engines as of (the “Relevant Engine Report”), and (iii) an Independent Appraiser’s Certificate (as defined in the Spare Parts Mortgage referenced in the Loan Agreement) dated [ ] (the “Relevant Spare Parts Appraisal”). The Valuation Date (as defined in the Spare Parts Mortgage) for purposes of the Relevant Spare Parts Appraisal was [ ] (the “Relevant Valuation Date”).
2. Based on the Relevant Engine Valuation Notice, the Relevant Engine Report, and the Relevant Spare Parts Appraisal, the following sets forth the calculation of the LDTV Ratio as of the [Relevant Valuation Date] [For first LDTV Compliance Report, the bracketed language will be replaced with the following: Funding Date after giving effect to the funding of the Loans in accordance with the Loan Agreement]:
L-1
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a. The Current Market Value of the Pledged Spare Parts, is at least |
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$ |
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b. The Current Market Value of the Pledged Spare Parts that are either (A) in transit or out for repair and consequently not located at a Designated Location as of the Relevant Valuation Date, or (B) located at a Designated Location that is at the premises of a third party maintenance facility as of the Relevant Valuation Date, in each case as set forth in the accompanying Independent Appraiser’s Certificate, is at least |
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c. The Current Market Value of the Engines is: |
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d. The aggregate principal amount of the Loans outstanding as of the [Relevant Valuation Date] [Funding Date] |
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e. The GE Deferral Amount as of the [Relevant Valuation Date] [Funding Date] |
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f. The amount of the Cash Collateral as of the [Relevant Valuation Date] [Funding Date] |
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e. The Collateral Ratio ((d + e - f) ÷ (a – b + c)) |
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% |
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Dated: [ ]
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Very truly yours, |
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INDEPENDENCE AIR, INC. |
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By: |
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Name: |
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Title: |
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L-2
Execution Version
GUARANTY
dated as of February 17, 2005
of
FLYI, INC.
Engines and Spare Parts Financing
L-1
TABLE OF CONTENTS
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i
GUARANTY
This Guaranty is issued as of February 17, 2005 by FLYi, Inc. (the “Guarantor”), a Delaware corporation, in favor of the parties listed in Schedule I hereto (the “Guaranteed Parties”).
The Guarantor is the direct or indirect owner of all of the common stock of Independence Air, Inc., a California corporation (the “Borrower”).
The Borrower is seeking certain financing to be secured by the aircraft engines and spare parts owned by the Borrower pursuant to that certain Loan Agreement dated as of the date hereof among the Borrower and General Electric Capital Corporation, as administrative agent and lender, and the other lenders from time to time party thereto (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “Loan Agreement”).
The Guaranteed Parties (other than the Non-Party Indemnitees) are unwilling to consummate the transactions contemplated by the Loan Agreement and certain of the Restructuring Transactions unless the Guarantor issues this Guaranty.
The terms defined in (or by reference in) the Loan Agreement, when capitalized as in the Loan Agreement, have the same meanings when used in this Guaranty. Any provision of any Applicable Law includes any such provision as amended, modified, supplemented, substituted reissued or reenacted before the Funding Date, and thereafter from time to time. Any agreement or instrument referred to herein and in the Loan Agreement means such agreement or instrument as from time to time supplemented and amended. “Including” means “including but not limited to”. “Or” means one or more, or all, of the alternatives listed or described. “Herein”, “hereof”, “hereunder”, etc. mean in, of, under, etc. this Guaranty (and not merely in, of, under, etc. the section or provision where the reference appears). References in this Guaranty to sections, paragraphs, clauses, appendices, schedules, and exhibits are to sections, paragraphs, clauses, appendices, schedules, and exhibits in and to this Guaranty unless otherwise specified.
The Guarantor therefore agrees as follows:
(a) Guarantee. The Guarantor acknowledges that it is fully aware of the terms and conditions of (i) the Loan Agreement, the Engine Mortgage, the Spare Parts Mortgage and the other Transaction Documents and (ii) the Payment and Indemnity Agreement, the Subordinated Engine Mortgage, the Subordinated
1
Spare Parts Mortgage and the other Subordinated Documents (collectively, the “Guaranteed Documents”), and hereby irrevocably and unconditionally guarantees to the Guaranteed Parties and to their successors and assigns, as primary obligor and not merely as surety, without offset or deduction, (1) the Borrower’s payment of all its payment obligations under the Guaranteed Documents when due (including when due by virtue of the declaration of the Loans and/or any of the IAI Transaction Documents (as defined in the Payment and Indemnity Agreement) to be in default) (the “Financial Obligations”), and (2) the Borrower’s performance of all its other obligations under the Guaranteed Documents (the “Nonfinancial Obligations”) (the Financial Obligations and Nonfinancial Obligations together being the “Obligations”).
(b) Absolute Guarantee. The Guarantor’s obligations under this Guaranty shall be absolute and unconditional, shall remain in full force and effect until irrevocable payment, performance, or observance in full of all of the Obligations, and shall not be affected by any action taken or not taken by any Guaranteed Party, by any lack of prior enforcement or retention of any rights against the Borrower or the Guarantor, by any illegality, unenforceability, or invalidity of the Obligations or the Guaranteed Documents, by any other guaranty or other obligations, or by any other circumstance or condition (whether or not the Guarantor or the Borrower shall have any knowledge or notice thereof), including: (1) any termination, amendment, modification, or other change in, or supplement to, any of the Guaranteed Documents or any other agreement, or to the Collateral or any part thereof, or any assignment, mortgage, or transfer thereof, or any leasing or subleasing of any Collateral or any part thereof, or any furnishing or acceptance of additional security, or release of any security, for the obligations of the Borrower under the Guaranteed Documents, or the failure of any security or any failure to perfect any interest in any collateral given by the Borrower under the Guaranteed Documents; (2) any failure, omission, or delay on the part of any Person to conform or comply with any term of any Guaranteed Document or any other agreement, including failure to give notice to the Guarantor of the occurrence of an Event of Default or Potential Default; (3) any waiver of the payment, performance, or observance of any of the obligations, conditions, covenants, or agreements contained in any Guaranteed Document or any other agreement or any other waiver, consent, extension, indulgence, compromise, settlement, release, or other action or inaction under or in respect of any Guaranteed Document, or any exercise or nonexercise of any right or remedy under any Guaranteed Document or any obligation or liability of the Borrower or any Guaranteed Party, or any exercise or nonexercise of any right, remedy, power, or privilege under or in respect of any Guaranteed Document or any such obligation or liability; (4) any extension of time for payment or performance of any Obligation; (5) the exchange, modification, substitution, or surrender of any collateral; (6) any failure, omission, or delay on the part of any Guaranteed Party to enforce, assert, or exercise any right, power, or remedy conferred on it in connection with any Guaranteed Document, or any other action on the part of any Guaranteed Party; (7) any voluntary or
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involuntary bankruptcy, insolvency, assignment for the benefit of creditors, receivership, conservatorship, custodianship, liquidation, marshalling of assets and liabilities, or similar proceeding with respect to the Borrower, the Guarantor, or any other Person or any of their respective properties or creditors, or the disaffirmance in whole or in part of any of the Guaranteed Documents in any such proceeding, or any action taken by any trustee or receiver or by any court in any such proceeding; (8) any limitation on the Borrower’s liability or obligations (or the liabilities and obligations of any other Person) or any discharge, termination, cancellation, frustration, irregularity, invalidity, or unenforceability, in whole or in part, of any of the Guaranteed Documents or any other agreement; (9) any defect in the title, compliance with specifications, condition, design, operation, or fitness for use of any Collateral or any part thereof, or any damage to or loss or destruction of any Collateral or any part thereof, or any interruption or cessation of the use of any Collateral or any part thereof for any reason (including any force majeure and any act of a Governmental Authority or military authority); (10) any merger or consolidation of the Borrower or the Guarantor into or with any other corporation, or any sale, lease, or other transfer of any of the assets of the Borrower or the Guarantor to any other Person or any change in the ownership of the Guarantor or in the control of any such owner; (11) to the extent permitted by law, any release or discharge, by operation of law, of the Guarantor from the performance or observance of any obligation, covenant, or agreement contained in this Guaranty; and (12) any other condition or circumstance which might otherwise constitute a legal or equitable discharge, release, or defense of a surety or guarantor, or which might otherwise limit recourse against the Guarantor, including any discharge, release, defense, or limitation arising out of any laws of the United States of America or any state thereof or any other Governmental Authority having authority thereover which would exempt, modify, or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder (it being agreed that the obligations of the Guarantor hereunder shall not be discharged except by payment or performance). No failure or delay in exercising any right under this Guaranty shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right of any Guaranteed Party under this Guaranty or the Guaranteed Documents.
(c) Guarantee of Payment and Performance. This Guaranty is a guarantee of payment and performance and not merely of collection, and the Guarantor waives any right to require that any action against the Borrower or any other Person or any collateral or security be taken or exhausted before action is taken against the Guarantor. No Guaranteed Party shall be required (1) to file suit or to proceed to obtain or assert a claim against the Borrower for the Obligations, (2) to make any effort at collection of the Obligations from the Borrower, (3) to foreclose against or seek to realize upon any present or future security for the Obligations, (4) to file suit or to proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations,
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or to make any effort at collecting the Obligations from any such other Person, or to exercise or assert any other right or remedy to which any Guaranteed Party is or becomes entitled in connection with the Obligations or any security or other guarantee therefor, or (5) to assert or to file any claim against the assets of the Borrower or any other guarantor or any other Person liable for the Obligations, or any part thereof, either before or as a condition to enforcing the Guarantor’s liability under this Guaranty or to require the Guarantor to pay or perform the Obligations at any time thereafter.
(d) Waiver. The Guarantor hereby waives diligence, presentment, demand, protest, and notice of any kind whatsoever with respect to this Guaranty or the Obligations, including (1) notice of acceptance of this Guaranty, notice of nonpayment or nonperformance of any of the Obligations, and notice of an Event of Default or Potential Default; (2) any requirement to exhaust any remedies exercisable upon a default under any Guaranteed Document or other agreement; (3) any notice of any sale, transfer, or other disposition of any right or title to or interest in any of the Collateral; and (4) any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge, release, or defense of a guarantor or surety or which might otherwise limit recourse against the Guarantor.
(e) Termination. The Guarantor’s obligations under this § 1 shall terminate (subject to reinstatement under § 3 hereof) when the Obligations have been irrevocably paid and performed in full.
2. Rights Limited to Guaranteed Parties. This Guaranty shall not create any right in any Person except the Guaranteed Parties (and their permitted successors and assigns), and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person.
3. Bankruptcy, etc. If at any time all or any part of any payment or performance theretofore applied to any of the Obligations is or must be rescinded or returned for any reason whatsoever (including the bankruptcy, insolvency, or reorganization of the Borrower), such Obligations shall, for purposes of this Guaranty, to the extent rescinded or returned, be deemed to have continued in existence, notwithstanding such application by any Guaranteed Party, and this Guaranty shall continue to be effective or be reinstated, as the case may be, as to such Obligations all as though such application by any Guaranteed Party had not been made. If an event permitting the declaration of default under a Guaranteed Document exists at any time, and such declaration of default is prevented by the pendency against Borrower or any other Person of a case or proceeding under a bankruptcy or insolvency law, then for purposes of this Guaranty and the Guarantor’s obligations hereunder, such Guaranteed Document shall be deemed to have been declared in default with the same effect
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as if such Guaranteed Document had been enforceable in accordance with the terms thereof, and the Guarantor shall forthwith pay the amounts due hereunder as specified by any Guaranteed Party, any interest thereon, and any other amounts guaranteed hereunder, without further notice or demand.
4. Subrogation, Etc.. The Guarantor hereby irrevocably and unconditionally waives any and all rights it may have or obtain, by reason of the performance of the terms and provisions of this Guaranty, to be subrogated to the rights and privileges of any Guaranteed Party against any collateral security or guarantee or right of offset held by any Guaranteed Party for the payment of the Obligations pursuant to the Guaranteed Documents or otherwise, except as provided in this § 4. If the Guarantor makes a payment to a Guaranteed Party under this Guaranty, the Guarantor shall be subrogated to that Guaranteed Party’s claims against the Borrower or any other Person relating to that payment. Any such subrogation right and any contractual, common law, statutory, or other rights of reimbursement, contribution, exoneration, or indemnification (or any similar rights) from or against the Borrower which may arise in connection with this Guaranty shall be subject and subordinate to the Guaranteed Parties’ rights under the Guaranteed Documents until all of the Obligations that are due and payable have been paid in full, and until such time, the Guarantor agrees not to claim or enforce any such right in whole or in part against the Borrower. No payment or performance hereunder by the Guarantor shall give rise to any claim of the Guarantor against any of the Guaranteed Parties; provided, that this sentence shall not prevent the Guarantor from being subrogated to any claim available to the Borrower.
5. Amendments and Other Actions. Any Guaranteed Party may, in its discretion, and without affecting the Guarantor’s absolute and unconditional liability under this Guaranty, agree to amendments, modifications, or supplements to the Loan Agreement, the Payment and Indemnity Agreement, the Engine Mortgage, the Subordinated Engine Mortgage, the Spare Parts Mortgage, the Subordinated Spare Parts Mortgage and/or the other Guaranteed Documents, or any other agreement, give or withhold consents, waivers, or approvals, and exercise or refrain from exercising rights under the Loan Agreement, the Payment and Indemnity Agreement, the Engine Mortgage, the Subordinated Engine Mortgage, the Spare Parts Mortgage, the Subordinated Spare Parts Mortgage, the other Guaranteed Documents, or any other agreement.
6. Assignment. Any Guaranteed Party may at any time sell, assign, transfer, or otherwise dispose of its interest in all or any part of this Guaranty, the Loan Agreement, the Payment and Indemnity Agreement, the Engine Mortgage, the Subordinated Engine Mortgage, the Spare Parts Mortgage, the Subordinated Spare Parts Mortgage, the other Guaranteed Documents, or any
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other agreement and in the property and interests subject thereto and hereto, subject to any limitations and conditions thereon in any such Guaranteed Document or other agreement. To the extent of the interest acquired by it, any purchaser, assignee, transferee, or other party so acquiring any Guaranteed Party’s interest shall have the same rights as such assigning Guaranteed Party hereby and shall be deemed and declared a “Guaranteed Party” hereunder. The Guarantor shall not assign any of its rights or obligations hereunder, including any claim arising by subrogation.
7. Written Changes Only. No amendment, waiver, or consent under the terms of this Guaranty shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Guaranteed Party, other than the Non-Party Indemnitees.
8. Payments. All payments by the Guarantor hereunder shall be made in the United States in U.S. dollars and in immediately available funds, and otherwise as provided in the Guaranteed Documents pursuant to which the relevant Obligations are created. All payments hereunder shall be made free and clear of, and without deduction or withholding for or on account of, any Taxes, to the extent that any such Taxes would reduce the amount that the Guaranteed Party receiving the payment otherwise would have received had the Borrower made such payment. If any Taxes must be deducted or withheld from any payment hereunder, the Guarantor shall increase the amount paid so that the Guaranteed Party receiving the payment receives the full amount of the payment provided for in this Guaranty on an after-tax basis.
9. Representations, Warranties, and Covenants. The Guarantor hereby represents, warrants, and covenants to the Guaranteed Parties as follows:
(a) Organization. The Guarantor is a corporation duly organized, validly existing, and in good standing under the laws of Delaware, is a U.S. Citizen, and has the power and authority to carry on its business as now conducted, to own or to hold under lease the properties it holds itself out as owning or leasing, and to enter into and perform its obligations under this Guaranty. The Guarantor is duly licensed or qualified to do business as a foreign corporation in good standing in each jurisdiction where the failure to be so qualified or in good standing would have a materially adverse effect on its business or financial condition or would impair its ability to perform its obligations under this Guaranty.
(b) Authorization; Compliance. The Guarantor has the power and authority to issue this Guaranty. This Guaranty has been duly authorized by all necessary action on the Guarantor’s part, and does not require any approval or
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other action of the shareholders of the Guarantor or approval or consent of any trustee or holders of any indebtedness or obligations of the Guarantor or of any other Person, except such as have been obtained, and the Guarantor has duly executed and delivered this Guaranty. The Guarantor’s execution, delivery, and performance of this Guaranty are not inconsistent with the Guarantor’s certificate of incorporation or bylaws, do not contravene any Applicable Law applicable to or binding on the Guarantor, and do not contravene, result in any breach of, or constitute any default or result in the creation of any Lien under, any indenture, mortgage, security agreement, deed of trust, or other agreement or instrument to which the Guarantor is a party or by which the Guarantor or its properties are bound.
(c) Approvals. Neither the Guarantor’s execution and delivery of this Guaranty, nor the Guarantor’s consummation of any of the transactions contemplated hereby, requires the consent or approval of, giving of notice (other than subsequent reporting requirements) to, registration with, or taking of any other action in respect of, any Governmental Authority, except any which are in full force and effect.
(d) Validity of Guaranty. This Guaranty has been duly entered into, executed, and delivered and constitutes a legal, valid, and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium on other similar laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. The Guarantor’s obligations under this Guaranty rank, and until discharged in full will continue to rank, in right of payment and security, equally and ratably in all respects with all the Guarantor’s present and future unsecured and unsubordinated indebtedness for borrowed money.
(e) Litigation. There are no pending or, to the Guarantor’s knowledge, threatened actions, suits, or proceedings before any court or Governmental Authority, arbitrator, or administrative agency that may be expected to have a materially adverse effect on the Guarantor’s financial condition or ability to perform its obligations under this Guaranty, except as set forth in the SEC Reports or Schedule 3.1(e) to the Loan Agreement.
(f) Borrower’s Representations and Warranties. The Borrower’s representations and warranties contained in Article 3 of the Loan Agreement are true and correct as of the date hereof.
(g) Tax Assessments. The Guarantor does not know of any proposed tax assessment against it and, in the Guarantor’s opinion, all the Guarantor’s tax liabilities are adequately provided for.
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(h) Annual Reporting. The Guarantor shall furnish to the Guaranteed Parties (other than the Non-Party Indemnitees) during the Term of the Lease:
(aa) within 120 days after the end of each fiscal year of the Guarantor, a copy of the Form 10-K (excluding exhibits) filed by the Guarantor with the SEC for such fiscal year (or in lieu of such copy, an e-mail notice that such report has been filed with the SEC and providing a web site address (other than the SEC’s website) at which such report may be accessed, provided that such e-mail notice will satisfy this requirement only if such report is in fact accessible at such web site address), or, if no such Form 10-K was so filed, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by the Guarantor’s independent public accountants of recognized national standing to the effect that such consolidated financial statements present fairly in all material respects the consolidated financial condition and results of operations of the Guarantor on a consolidated basis in accordance with GAAP;
(bb) within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Guarantor, a copy of the Form 10-Q (excluding exhibits) filed by the Guarantor with the SEC for such quarterly period (or in lieu of such copy, an e-mail notice that such report has been filed with the SEC and providing a web site address (other than the SEC’s website) at which such report may be accessed, provided that such e-mail notice will satisfy this requirement only if such report is in fact accessible at such web site address), or if no such Form 10-Q was so filed, its consolidated balance sheet and related statements of operations and cash flows as of the end of and for such fiscal quarter (in the case of the statement of operations) and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, prepared in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes; and
(cc) promptly, such other financial data or information regarding the Guarantor as any Guaranteed Party (other than the Non-Party Indemnitees) from time to time reasonably requests.
(i) ERISA. The Guarantor has met its minimum funding requirements under ERISA with respect to all of Guarantor’s employee benefit plans covered by the minimum funding requirements of ERISA, and has not incurred any material liability to the Pension Benefit Guaranty Corporation (or any entity succeeding to any or all of said Corporation’s functions under ERISA) under
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ERISA in connection with any such plan. None of the employee benefit plans maintained by the Guarantor is subject to Title IV of ERISA.
(j) No Sovereign Immunity. The Guarantor is not entitled to (or has waived) sovereign immunity under the laws of any jurisdiction.
10. Covenants of the Guarantor.
(a) Corporate Existence; Merger, Sale, etc. The Guarantor will do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, provided, that nothing in this § 10(a) shall prevent the Guarantor from merging into, consolidating with, or selling all or substantially all of its assets to any Person in compliance with § 10(b) hereof, and (ii) its qualifications to do business in such jurisdictions as may be necessary for it to carry out the transactions contemplated by this Guaranty.
(b) Merger, Sale, etc. The Guarantor will not consolidate with or merge with or into any other Person or convey, transfer or lease all or substantially all of its assets as an entirety to any Person unless:
(aa) the Person formed by such consolidation or into which the Guarantor is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Guarantor as an entirety (the “Successor”) shall execute and deliver to the Guaranteed Parties a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Guaranteed Parties containing an assumption by the Successor of the due and punctual performance and observance of each covenant and condition of the Transaction Documents to be performed or observed by the Guarantor;
(bb) no Event of Default shall have occurred and be continuing at the time of the proposed transaction; no Potential Default or Event of Default shall arise upon giving effect to such transaction; such transaction shall not materially impair the ability of the Successor to perform its obligations under this Guaranty and the other Guaranteed Documents to which the Guarantor is a party; and this Guaranty shall remain in full force and effect (unless the Guarantor has merged with the Borrower) in respect of the Borrower’s obligations under the Guaranteed Documents;
(cc) the tangible net worth (determined in accordance with GAAP) of the Successor, after giving effect to such transaction, shall not be less than the greater of (i) the lesser of (x) the tangible net worth of the Guarantor immediately prior to such transaction and (y) the tangible net worth of the Guarantor as of December 31, 2001, and (ii) [***]% of the tangible net worth of the Guarantor immediately before completion of such transaction; provided, that if the Guarantor owns more than 50% of the
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capital stock of Borrower immediately before such transaction, the net worth test contained in this § 10(b)(cc) shall not prevent the Guarantor from completing such transaction with Borrower; and
(dd) promptly after the consummation of such transaction, the Successor shall deliver to the Guaranteed Parties an Officer’s Certificate of the Successor certifying compliance with the conditions of this § 10(b) and an opinion of counsel reasonably acceptable to the Guaranteed Parties and in form and substance reasonably satisfactory to the Guaranteed Parties, (i) stating that the agreements entered into to effect such consolidation, merger, sale, conveyance, transfer, or lease and such assumption agreements have been duly authorized, executed, and delivered by the Successor and that they (and this Guaranty so assumed) constitute legal, valid, and binding obligations of the Successor, enforceable in accordance with their terms (in the case of this Guaranty, to the same extent as this Guaranty was enforceable against the Guarantor immediately prior to such transaction), (ii) stating that all conditions precedent that are legal in nature provided for in this Guaranty and the Guaranteed Documents and relating to such transaction have been fulfilled, and (iii) containing such other matters as the Guaranteed Parties reasonably request.
Upon any such merger or consolidation or conveyance, sale, transfer or lease of all or substantially all of the assets of the Guarantor as an entirety in accordance with this § 10(b), the Successor shall succeed to, shall be substituted for, and may exercise every right and power of the Guarantor under this Guaranty, with the same effect as if the Successor had been named as the Guarantor herein. No such merger or consolidation or conveyance, sale, transfer, or lease of all or substantially all the Guarantor’s assets as an entirety shall have the effect of releasing the Guarantor (or any Successor) from its liability under this Guaranty. The Guarantor shall pay all reasonable out-of-pocket expenses of the Guaranteed Parties in respect of such transfer.
11. Consent to Jurisdiction. The Guarantor irrevocably agrees that any legal action or proceeding brought against the Guarantor with respect to this Guaranty may be brought and determined in the Supreme Court of the State of New York, New York County, or in the United States District Court for the Southern District of New York, and the Guarantor hereby irrevocably accepts with regard to any such action or proceeding, for itself and in respect of its properties, generally and unconditionally, the nonexclusive jurisdiction of those courts. The Guarantor hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense or counterclaim, or otherwise, in any such action or proceeding, any claim that it is not personally subject to the jurisdiction of the foregoing courts, that it or its property is exempt or immune from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, or otherwise), and, to the extent permitted by law, that the suit, action, or proceeding is brought in
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an inconvenient forum, that the venue of the suit, action, or proceeding is improper, or that this Guaranty or the subject matter hereof may not be enforced in or by such courts, and further irrevocably waives, to the extent permitted by law, the benefit of any defense that would hinder or delay the levy, execution, or collection of any amount to which any Guaranteed Party is entitled pursuant to a final judgment of any court having jurisdiction (provided, that this sentence shall not waive any requirement of service of process). Nothing herein shall affect any Guaranteed Party’s right to commence legal proceedings or otherwise proceed against the Guarantor in any other jurisdiction in which the Guarantor shall be subject to suit.
The Guarantor consents to service of process to its address as set forth in § 13.
THE GUARANTOR AND EACH OF THE GUARANTEED PARTIES IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE OTHER OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12. Integration; Successors and Assigns . This Guaranty constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Guaranteed Parties, with respect to the subject matter hereof. This Guaranty shall bind the Guarantor’s successors and permitted assigns, and shall benefit, and be enforceable by, the Guaranteed Parties and their successors and permitted assigns. In addition, this Guaranty shall bind and inure to the benefit of and be enforceable by any other Person who becomes a Beneficiary (as defined in the Indemnity Agreement) in accordance with the Indemnity Agreement.
13. Notices. All requests, demands, notices, and other communications hereunder shall be in writing (including telecopies), shall be in English, shall be effective on delivery, and shall be addressed as follows (or to such other address as any such person shall designate by notice to each other such person):
if to the Guarantor:
FLYi, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
Tel: (000) 000-0000
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if to any Guaranteed Party:
to its address set forth in the Loan Agreement or the Payment and Indemnity Agreement, as the case may be.
14. Governing Law. This Guaranty is delivered in, and shall in all respects be governed by and construed in accordance with the laws of, the state of New York, U.S.A.
15. Costs and Expenses. The Guarantor agrees to pay to any Guaranteed Party any and all expenses (including legal fees and expenses) incurred by such Guaranteed Party in enforcing this Guaranty, together with any expenses (including legal fees) incurred on account of the Guarantor’s bankruptcy or insolvency.
16. Performance. The Guarantor’s performance of any or all of the Obligations shall, for all purposes of the Guaranteed Documents, constitute performance by the Borrower of such Obligations.
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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date and year first above written.
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Execution Version
Schedule I
to Guaranty
General Electric Capital Corporation, in its individual capacity as Lender and Beneficiary and in its capacity as Administrative Agent and as Collateral Agent
Windy City Holdings,Inc., as Beneficiary
AFS Investments XI, Inc., as Beneficiary
AFS Investments XLI LLC, as Beneficiary
AFS Investments XLII LLC, as Beneficiary
Each of the other Indemnitees (the “Non-Party Indemnitees”)
ENGINE MORTGAGE AND SECURITY AGREEMENT
Dated as of February 18, 2005
between
INDEPENDENCE AIR, INC.
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Secured Party
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